ZEL - Z Energy.

[Joshuatree]

I am in this purely for yield so have I have decided to exit my stake at this stage and will reevaluate my position in due course. The political climate is simply too hostile at present and I have noted a breakdown through the 100 day MA. The blatant hypocrisy of this Government with their rampant and repeated increases in fuel taxes makes me almost physically sick.
AIR has a higher yield and is in my view a better risk-reward proposition at this point, (see my post in that thread this morning) and AIR's yield in my view is likely to be more sustainable over the very long term. FWIW that's where I redirected my capital...not much joy fighting Govt, might as well join with them with their majority stake in the airline. I have learned from my gentailier investments partnering with the Govt is much more rewarding than fighting them ! Good luck to holders.
As stated above, I will reevaluate this one down the track a bit.

Throw up all you like just keep a doggy bag under your mouth, clean up as you go thanks;). I see youve chosen to carry on politicking on this thread. Just remember national have done nearly exactly the same amount in fuel taxes and patheticly wrote a "strongly" worded letter to the fuel companies about their profiting, NOTHING ELSE, pathetic. At least this govt is doing all it can to be pro active and try and force some changes on the Fuel companies. Thank dog for that!

Been a good time in ZEL for me but watching closely atm.

[Beagle]

Its not politicking its calling out hypocrisy and I am certainly not the only one who thinks that ! The hard facts are that Labour in their very short tenure have implemented 2 x 3.5 cent fuel excise levy increases plus GST already and another one due to be implemented next year, total 10.5 cents plus GST, just over 12 cents per liter inclusive of GST, and another 11.5 cents per liter plus GST on a regional fuel tax for Aucklanders. That's a total of over 25 cents per liter inclusive of GST for poor families in Auckland in just 3 years ! Who's the real fleecer ? Better use a paper doggy bag eh...wouldn't want another 101 posts about excessive carbon emissions from plastic bags on here would we :p

[macduffy]

Hypocrisy or not, it's just obviously good politics to attack the oil companies. Only extreme greenies will vote for higher petrol prices.

Disc: Holding ZEL

[Joshuatree]

Its not politicking its calling out hypocrisy and I am certainly not the only one who thinks that ! The hard facts are that Labour in their very short tenure have implemented 2 x 3.5 cent fuel excise levy increases plus GST already and another one due to be implemented next year, total 10.5 cents plus GST, just over 12 cents per liter inclusive of GST, and another 11.5 cents per liter plus GST on a regional fuel tax for Aucklanders. That's a total of over 25 cents per liter inclusive of GST for poor families in Auckland in just 3 years ! Who's the real fleecer ? Better use a paper doggy bag eh...wouldn't want another 101 posts about excessive carbon emissions from plastic bags on here would we :p

Its politicking and youve refused to take it to the political threads and national did the same but did not make any attempt to do anything about it. Pathetic attempt there.Im sorry that this thread has been ambushed and here we are back to behaviour that for a while we had a quality break from.

[Beagle]

Its been a good and relevant debate about who is fleecing who and if you reread the thread I am by no means the only one calling Labour out. National, 17 cents excise increase in 9 years, barely keeping pace with inflation and Labour 25 cents extra tax for Aucklanders in less than 3 years. Deep shame upon Labour for saying ZEL are fleecing the public. I'll leave it at that as the numbers speak for themselves. Good luck to ZEL shareholders.

[Joshuatree]

You are misinforming readers and sound like a rampant national supporter spreading trump like fake propaganda as ive noticed this dumbing down tactic by national and on here. happy to take this to the political threads.Will not stand by watching this thread being polluted with fake propaganda.Totally unnecessary and dragging down sharetrader imo.

[Bjauck]

Its politicking and youve refused to take it to the political threads and national did the same but did not make any attempt to do anything about it. Pathetic attempt there.Im sorry that this thread has been ambushed and here we are back to behaviour that for a while we had a quality break from. Politics and business are linked. The Labour Government clearly have The Petrol retailers in their sights at the moment. The ComCom report gives the green light for them to go on the offensive. It will also be politically convenient for them to shift the spotlight to the oil companies and away from the recent increases in excise and levies.

However if excises and levies were reduced where else would the necessary funding be raised?

[Beagle]

Politics and business are linked. The Labour Government clearly have The Petrol retailers in their sights at the moment. The ComCom report gives the green light for them to go on the offensive. It will also be politically convenient for them to shift the spotlight to the oil companies and away from the recent increases in excise and levies.

However if excises and levies were reduced where else would the necessary funding be raised?

Inextricably linked, agreed but the real question is was it necessary to start increasing fuel taxes by four times the rate as previously ? Seeing someone seems all bent out of shape we're discussing it on here, perhaps we should move this debate to its own thread here https://www.sharetrader.co.nz/showthread.php?11594-Who-s-to-blame-for-high-fuel-prices&p=769116#post769116

[RTM]

Might soon retirement, electricity and banking stocks follow zel because these stocks are very next target for this govt. should have known this earlier.

Yes....I have been concerned about electricity for some time. Banking not so much. Government have to be careful tho, as if they are to heavy handed, then the companies simply won't spend on capital improvements / more generation. And they need to be careful re the dividend as they are 51 % share-holders and presumably need the dividend. But I agree, regulation of the industry is a risk for the Gentailers and shareholders. Disc: Hold all the power companies.

[Beagle]

Our retail power prices are apparent 20% below the OECD average but someone might try and argue they should be lower still because of the abundance of hydro.
The Governments 51% shareholding and considerable GST income from power should hopefully ensure common sense remains the status quo !
Disc: Own several gentailiers.

[RTM]

Our retail power prices are apparent 20% below the OECD average but someone might try and argue they should be lower still because of the abundance of hydro.
The Governments 51% shareholding and considerable GST income from power should hopefully ensure common sense remains the status quo !
Disc: Own several gentailiers.

I think the abundance of Hydro / Geothermal certainly supports a lower price. Is 20% enough ? Have no idea.

[Beagle]

I think the abundance of Hydro / Geothermal certainly supports a lower price. Is 20% enough ? Have no idea.

Lets not go there lol
Anyway...back on topic http://www.sharechat.co.nz/article/125f92cc/waitomo-favours-more-open-wholesale-fuel-contracts.html?utm_medium=email&utm_campaign=Waitomo%20favours%20more%20open%20who lesale%20fuel%20contracts&utm_content=Waitomo%20favours%20more%20open%20whol esale%20fuel%20contracts+CID_7966b8f0546e9d9c64d31 5395d1a4baa&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle125f92ccwaitom o-favours-more-open-wholesale-fuel-contractshtml

[winner69]

A 5c petrol price increase in Wellington this morning by Z seems a little steep.

No worries ...just a bit more fleecing of the motorist

Probably Z going to have a 5 cent off promo next week

Or maybe Wellington needs to subsidise the Auckland regional levy.

Should make shareholders happy

[RGR367]

A 5c petrol price increase in Wellington this morning by Z seems a little steep.

No worries ...just a bit more fleecing of the motorist

Probably Z going to have a 5 cent off promo next week

Or maybe Wellington needs to subsidise the Auckland regional levy.

Should make shareholders happy

Another 5 cents? Tawa Z Station last night was at 2.259 so I had my car filled up at Waitomo Thordon station for 2.059 on my way back from chess night. On the same road, Caltex is selling at 2.059 too but only because of the competition. So yes, petrol users are getting fleeced somehow.

disc: obviously not a Z shareholder

[RTM]

$1.89 at Gull Waipapa yesterday.

[winner69]

One Z in Wellington didn’t just do the 5 cents ...it increased prices by 10 cpl

Shareholders rejoicing I hope

[kiwico]

Another 5 cents? Tawa Z Station last night was at 2.259 so I had my car filled up at Waitomo Thordon station for 2.059 on my way back from chess night. On the same road, Caltex is selling at 2.059 too but only because of the competition. So yes, petrol users are getting fleeced somehow. disc: obviously not a Z shareholder

I am a Z shareholder but always happy to fill up at the cheapest station. I very rarely fill up in Tawa as both Porirua and Johnsonville are almost always cheaper, and rarely fill up at Z as I can get petrol cheaper elswhere. I see no issue using a cheaper competitor of a company I own a slim portion of, but am very happy others continue their not so penny pinching ways.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340147/306742.pdf
Wonder who this guy is and what he's on about ?

[tuaman]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340147/306742.pdf
Wonder who this guy is and what he's on about ?


This guy.
https://www.stuff.co.nz/business/115411159/fonterra-genesis-energy-and-z-sued-for-failing-to-protect-against-effects-of-climate-change

[Beagle]

Genesis and ZEL have entered into a partnership with Contact and AIR to create the drylandcarbon partnership which will involve the reforestation of vast amounts of marginal land. He's on a hiding to nothing except a whole lot of costs, both for his own legal representative(s) and awarded costs from other parties when he loses, (assuming this ever sees the light of day in court and they don't throw it out as vexatious or frivolous). Maybe he could try suing the Chinese for their emissions lol

[peat]

market obviously doesnt care about Mike Smith.

[iceman]

market obviously doesnt care about Mike Smith.

And that feeling probably not limited to Mr.Market. What an utter waste of time and probably all paid for one way or another with taxpayer grants

[winner69]

OMG — a huge profit downgrade — like $60m less than previous one — that’s 13% less

And dividend to be less than they said


But no worries - still a great yield stock

Get in early at the open for the sale of the century (OK the decade)

[Leftfield]

Z energy profit downgrade today see here (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340763/307441.pdf)

[BlackPeter]

OMG — a huge profit downgrade — like $60m less than previous one — that’s 13% less

And dividend to be less than they said


But no worries - still a great yield stock

Get in early at the open for the sale of the century (OK the decade)

Don't they say downgrades come in three's? Might be a bit early to queue up for cheap shares today ...

[winner69]

So they are going to make less in F2020 than in F2019 - not good

Didn’t they have 2 earnings downgrades last year before they hyped it up as year went along.

Their forecasting about as good as Comvita’s.

[winner69]

Don't they say downgrades come in three's? Might be a bit early to queue up for cheap shares today ...

Just have to average down eh BP

Great yield at $5. ...esp for a company providing a consumer staple

[winner69]

So it looks like earnings are going to decline 2 years in a row.

they said F2019 was a ‘year of two halves’

Hopefully F2020 will be as well.

Consumers obviously the winners at the moment ....better tell Jacinda

[kerryo]

OMG — a huge profit downgrade — like $60m less than previous one — that’s 13% less

And dividend to be less than they said


But no worries - still a great yield stock

Get in early at the open for the sale of the century (OK the decade)

Well that explains yesterdays price drop for no apparent reason. Leaky boat.

[bull....]

massive down grade in profits , not surprised really have mentioned on the thread gull and waitomo would eat there lunch.

cut in dividends just goes to show its not a reliable form of income.

[sb9]

About 4c impact on overall divvy.

"Z is also updating its dividend guidance for the financial year FY20 to now be in a range of $0.48 to $0.50 cents per share from the previous range $0.48 to $0.54 cents per share."

Its all about yield that matters these days.

[RTM]

Well that explains yesterdays price drop for no apparent reason. Leaky boat.

So does it also explain why the whole market was down yesterday ? Phew, that’s a relief.

[Beagle]

Z energy profit downgrade today see here (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340763/307441.pdf)

WOW...that's a HUGE downgrade at an EBITDAF level. $410m down from $470m previously, (both figures are stated as mid point of expected range).
With Jascinda on the warpath and the fuel price enquiry still not complete I am glad I am out as I was just reflecting yesterday that this companies track record of dividend payments is patchy, (recall how there was a major miss with last year's interim dividend).

Dividends are not as reliable as I had hoped for and there's clearly regulatory risk and in the long term, (albeit at a glacial pace), a headwind from electric vehicles.

[bull....]

its broken below 6 this is bad technically

[BlackPeter]

its broken below 6 this is bad technically

There might be some resistance though around $5.20 ;);

[bull....]

There might be some resistance though around $5.20 ;);

break below 6 sort of opens up the posibiliites of testing around your figure. esp if competition becomes the norm

[Beagle]

There might be some resistance though around $5.20 ;);

I got to thinking, as any good dog does when looking for the next feed, what is a fair value given the well known risks and this profit downgrade.
I think I'd want 12.5% gross yield for all the risk and the knowledge this is in long term very, very gradual decline.
12.5% gross on 49 cents fully imputed = 68.06 cents gross implies $5.44 to get 12.5% gross, but heck, these things often overshoot so this dog is interested in having another bite at $5.20. Worked last year, a real treat :D

I think the unreliability and vulnerability of this one including regulatory risk and long term electric vehicle systemic headwinds is notable in its characteristics compared to the other 2 very high yielders I follow, AIR and HLG both of whom don't have the regulatory or other long term headwind issues and both of whom offer similar but more reliable yields and have a considerably longer and more reliable track record of paying them. That's why I'd want at least a 1% yield premium with this one, albeit that this sells what effectively amounts to a consumer staple product.

Then again, I got to thinking the other day in a kind of left field way, the way people use aircraft just like a bus these days and people have to buy clothes, maybe AIR and HLG have some element of being consumer staples about them too ?

[winner69]

Z guidance always interesting - up and down and a few confirmations (Apologies, maybe forecasting not as bad as Comvita's)

Below is Z chart for last year or so with guidance noted

[bull....]

Z guidance always interesting - up and down and a few confirmations (Apologies, maybe forecasting not as bad as Comvita's)

Below is Z chart for last year or so with guidance noted

long term trend doesnt look good

[Beagle]

I have noticed with the change in loyalty scheme that Caltex went through that Z has also had to move, (for the very first time), to accepting that fuel discounts can be "accumulated", they call it "stacking".
This process whereby canny motorists can buy just $40 of fuel but accumulate as much as 10 cents per liter discount for later purchase of 50 liters, ($5 discount per time) effectively can be worked, (if one works it hard enough on 10 cent discount days), to give a $5 discount on each $40 fuel purchase = 12.5% discount which with fuel at say $2.15 = 26.9 cents per liter discount.

I expect this new (across the board) accumulation feature to hurt Z's margins permanently going forward as cumulative discounts was previously only available at Caltex branded fuel station's. I expect EBITDAF to come in right at the bottom of the range.

Just adding a bit more. Thing is, the company expects increased competition due to, among other things, the changes to discount and loyalty schemes (read increasing discount pressure from Gull and the other minnows), to affect EBITDAF by $50m this year and half of that has been brought to account in the five months to 31 August.
But its interesting to note that the discount scheme change only came into effect on 1 July so we've only had 2 months of that increased loyalty scheme discounting and there's potentially another 7 months disruption from that to go. While they, I, or anyone else can't be sure how long this additional discounting will continue the risk here is something I think they could be understating but is probably encapsulated within their EBITDAF range. Then there's the regulatory risk which they're obviously not factoring into their forecast at all, at this stage anyway.

[winner69]

So all the happy yield hunters who have been buying in at $6.50 odd have just become long term holders?

Maybe they did look at it as a 5 year term deposit.

[percy]

I have noticed with the change in loyalty scheme that Caltex went through that Z has also had to move, (for the very first time), to accepting that fuel discounts can be "accumulated", they call it "stacking".
This process whereby canny motorists can buy just $40 of fuel but accumulate as much as 10 cents per liter discount for later purchase of 50 liters, ($5 discount per time) effectively can be worked, (if one works it hard enough on 10 cent discount days), to give a $5 discount on each $40 fuel purchase = 12.5% discount which with fuel at say $2.15 = 26.9 cents per liter discount.

I expect this new (across the board) accumulation feature to hurt Z's margins permanently going forward as cumulative discounts was previously only available at Caltex branded fuel station's. I expect EBITDAF to come in right at the bottom of the range.

Just adding a bit more. Thing is, the company expects increased competition due to, among other things, the changes to discount and loyalty schemes (read increasing discount pressure from Gull and the other minnows), to affect EBITDAF by $50m this year and half of that has been brought to account in the five months to 31 August.
But its interesting to note that the discount scheme change only came into effect on 1 July so we've only had 2 months of that increased loyalty scheme discounting and there's potentially another 7 months disruption from that to go. While they, I, or anyone else can't be sure how long this additional discounting will continue the risk here is something I think they could be understating but is probably encapsulated within their EBITDAF range. Then there's the regulatory risk which they're obviously not factoring into their forecast at all, at this stage anyway.

Thanks to Winston as a Gold Card holder I receive 15 cents off a litre at both NPD,and Challenge.
At Christmas time I buy $200 worth of Pak'Save specials and receive 40 cents off a litre.
Z and Flybuys sending me emails with 6 cents and 10 cents off,get deleted straight away.

[Beagle]

Thanks to Winston as a Gold Card holder I receive 15 cents off a litre at both NPD,and Challenge.
At Christmas time I buy $200 worth of Pak'Save specials and receive 40 cents off a litre.
Z and Flybuys sending me emails with 6 cents and 10 cents off,get deleted straight away.

That's great Percy but the discount may not necessarily be as much as face value, something for you to look into ?. I can't comment on your area, obviously, but the only Challenge around here is a very old style garage that's consistently about 5-10 cents per liter more than service stations within a 2 km radius. I do think the minnows will very very slowly eat into Z's market share and keep the pressure on retail margins, then there's possible regulatory headwinds as well as long term very gradually increasing electric vehicle headwinds. Plenty of possible headwinds there...

[percy]

All the service stations in my area ,have the same prices,so the savings are genuine.
Am noticing more Nissan Leafs on the road.
My car should be good for the next 5 to 10 years,so have not given a thought about a replacement.

[Beagle]

All the service stations in my area ,have the same prices,so the savings are genuine.
Am noticing more Nissan Leafs on the road.
My car should be good for the next 5 to 10 years,so have not given a thought about a replacement.

That's good then isn't it ! I think EV's are at their best relative to other vehicles in very, very hilly area's like we live in, (as they can recapture some energy going downhill through regenerative braking). I am also noticing increasing numbers of Nissan Leaf's and quite a few Tesla's around here too.
Although I remain of the view that EV vehicle uptake will be at a very "glacial" pace, nevertheless it is a very gradually building headwind that cannot be ignored completely. I think Z would be very wise to start rapidly rolling out fast charging stations at many of their forecourt's so people would be spending on coffee and other in store refreshments while they wait for their EV's to be charged. Best to get ahead of the curve and milk it with increased in store sales eh :)
Wonder if this has crossed Z Management's minds ?

Really this downgrade highlights what a very low margin business this is.

[winner69]

Not looking like a good year profit wise for Z

Their preferred profit measure is RC EBITDAF

FY19 this was $434m ....which was $15m less than FY18

Revised guidance is a low of $$390m but includes $25m of IFRS16 things (no rental expense but shows a depreciation)

So on a like for like basis EBITDAF F20 going to be $365m ....a whopping 16% less than F19

Reading all the presentations with all the talk about synergies, restructuring, digitalisation and heaps of other stuff this years performance is rather pathetic.

Lot of hype ...no delivery

[Beagle]

Steady downtrend there eh Winner. Might only net 3-4 cents per liter of fuel sold this year. Govt's total take incl GST over $1 per liter but Jascinda tells us the fuel companies are fleecing us. Is it too early for a Tui ?

[winner69]

Steady downtrend there eh Winner. Might only net 3-4 cents per liter of fuel sold this year. Govt's total take incl GST over $1 per liter but Jascinda tells us the fuel companies are fleecing us. Is it too early for a Tui ?

Z have a real high return on invested capital ......some might say excessive ....and greedy along with it.

[peat]

Wow, glad I got all out last week at 6.57
and I was thinking that you’d unnecessarily shaken your self out of the tree, Beagle.

[winner69]

I am in this purely for yield so have I have decided to exit my stake at this stage and will reevaluate my position in due course.

That was Aug 22 — share price 620/630

A lot can happen in a few weeks eh

[Beagle]

That was Aug 22 — share price 620/630

A lot can happen in a few weeks eh

Yeah it sure can. Let the first half go at ~ $6.40 so average exit not as good as Peat but not far off.
Funny thing Peat is I was just wondering myself the other day when it hit $6.50+ whether I'd let Jascinda's barking frighten me off. Turns out she did me a favour lol
In another ironic and lucky twist I was just chewing it over, over my muesli for breakfast this morning whether I'd made a mistake selling a little while ago and would buy half them back this morning.... so it was quite a timely company update.

You need a bit of luck to go with good TA, FA and CA.

[winner69]

Bit of a worry this ANZ guy - we missed the GFC and it’s still to hit us


2
11 September 2019
ANZ Global Chief Economist Richard Yetsenga says many small economies have made the same mistake of presuming the financial crisis had nothing to do with them.

He says the reality is it takes longer for the ripples of economic issues to reach small open economies like New Zealand and Australia.

[Baa_Baa]

Is it a concern to anyone that the SP dropped 30 cents yesterday, BEFORE today's announce? Wouldn't have thought ZEL was leaky but now I have suspicions.

[Beagle]

Bit of a worry this ANZ guy - we missed the GFC and it’s still to hit us


2
11 September 2019
ANZ Global Chief Economist Richard Yetsenga says many small economies have made the same mistake of presuming the financial crisis had nothing to do with them.

He says the reality is it takes longer for the ripples of economic issues to reach small open economies like New Zealand and Australia.

Same guy that predicted we'd be 40p against the Pound by now ? That's quite an ivory tower he lives in...

Is it a concern to anyone that the SP dropped 30 cents yesterday, BEFORE today's announce? Wouldn't have thought ZEL was leaky but now I have suspicions.
You sure it was 30 cents ? From memory I recall it fell about 20 cents and wasn't far out of line with the general market which was down ~ 2%.
Not defending these guys as really they should have updated the market earlier if things are as tough as they're saying...

FWIW I think there's a real chance this goes back down to $5.20 again in due course but the real question is, (if it goes there), does that make it a buy again ?

[sb9]

Is it a concern to anyone that the SP dropped 30 cents yesterday, BEFORE today's announce? Wouldn't have thought ZEL was leaky but now I have suspicions.

Does appear that way, was rather a large drop y'day from the usual trading pattern.

[freddagg]

Does appear that way, was rather a large drop y'day from the usual trading pattern.

Some of the generators dropped a lot yesterday as well.

[sb9]

Some of the generators dropped a lot yesterday as well.

True, they seem to have recovered a bit today and no price sensitive news from them either unlike in ZEL's case. That's the difference.

[Baa_Baa]

You sure it was 30 cents ? From memory I recall it fell about 20 cents and wasn't far out of line with the general market which was down ~ 2%.
Not defending these guys as really they should have updated the market earlier if things are as tough as they're saying...


Sorry, 30 cent drop was an exaggeration, it dropped 29 cents from the previous day close, on no news. Then today happened!

[Beagle]

Sorry, 30 cent drop was an exaggeration, it dropped 29 cents from the previous day close, on no news. Then today happened!

That's quite a lot more than what is suggested by the 2% market drop of the NZX50 isn't it. Hmmmm

[ananda77]

No really. ACC started to sell 1% of their holding, September 11

[winner69]

That's quite a lot more than what is suggested by the 2% market drop of the NZX50 isn't it. Hmmmm

A few of those big companies with high yields were down quite a lot yesterday ...some 5%

Might have just got up in the rush ....bull said something to do the collapse in bonds

[winner69]

No really. ACC started to sell 1% of their holding, September 11

Holding seems to have increased

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340833/307515.pdf

[Beagle]

http://www.sharechat.co.nz/article/f46779b9/z-energy-cuts-forecast-by-60m-citing-unprecedented-discounting.html
My bad, new discount fuel scheme change was in fact 1 August 2019 not 1 July. So one full month into the new discount scheme and we get a $50m downgrade due to unprecedented discounting but this in the companies view is accounted for with this downgrade for the full year. Words to the effect that half the provisioning is historical and half projected in the NZX release but seeing as we've only had one full month of the new discount scheme this financial year and there's 7 more to go its an "interesting call" to only provision another $25m included with this $50m downgrade. (Effectively my read is they're provisioning $25m historical reduction in margin for the first 5 months trading, notwithstanding only one month is with the new scheme discounting and saying the next seven months, all of which will be with the new loyalty / discounting scheme, will result in the same quantum of profit reduction as for the first five months). They're also making no provision for any possible further pressure on margins due to regulatory inetrvention (Hope that makes sense to you guys...but provisioning looks a bit inadequate to me. I think the potential for another downgrade is quite clear).

My inclination is to steer well clear of this one for a fair while and assess the lie of the land in due course.

[winner69]

http://www.sharechat.co.nz/article/f46779b9/z-energy-cuts-forecast-by-60m-citing-unprecedented-discounting.html
My bad, new discount fuel scheme change was in fact 1 August 2019 not 1 July. So one full month into the new discount scheme and we get a $50m downgrade due to unprecedented discounting but this in the companies view is accounted for with this downgrade for the full year. Words to the effect that half the provisioning is historical and half projected in the NZX release but seeing as we've only had one full month of the new discount scheme this financial year and there's 7 more to go its an "interesting call" to only provision another $25m included with this $50m downgrade. (Effectively my read is they're provisioning $25m historical reduction in margin for the first 5 months trading, notwithstanding only one month is with the new scheme discounting and saying the next seven months, all of which will be with the new loyalty / discounting scheme, will result in the same quantum of profit reduction as for the first five months. They're also making no provision for any possible further pressure on margins due to regulatory inetrvention (Hope that makes sense to you guys...but it looks a bit inadequate to me. I think the potential for another downgrade is quite clear).

Whether intentional or not Z narrative and accounts are often rather confusing and can be interpreted different ways.

[Beagle]

Whether intentional or not Z narrative and accounts are often rather confusing and can be interpreted different ways.

I don't have any difficulty with their replacement cost reporting which is the norm for the industry and its certainly not in the almost deliberate obfuscation category of one of the companies in the retirement sector. That said I am sure Jascinda and her team will take their own view on profitability and return on invested capital and quite frankly who needs the political pressure when margins are so fine already ! Investing here feels like its analogous to swimming against an outgoing tide.
I don't think they'll even make $400m EBITDAF this year. Discounting stronger for longer is my read on it. Time to buy a V8 powered car again lol

[ananda77]

Holding seems to have increased

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340833/307515.pdf

Yes, Sorry my mistake! Holding a rather tiny number of shares in ZEL, but looks like, its gonna be for longer than I anticipated.

[winner69]

I don't have any difficulty with their replacement cost reporting which is the norm for the industry and its certainly not in the almost deliberate obfuscation category of one of the companies in the retirement sector. That said I am sure Jascinda and her team will take their own view on profitability and return on invested capital and quite frankly who needs the political pressure when margins are so fine already ! Investing here feels like its analogous to swimming against an outgoing tide.
I don't think they'll even make $400m EBITDAF this year. Discounting stronger for longer is my read on it. Time to buy a V8 powered car again lol

I’m OK with their replacement cost reporting

Just that often they explain something that looks good but tend to gloss over bits that aren’t that good....or so it in a way that doesn’t sound so bad.

[Beagle]

https://www.goodreturns.co.nz/article/976515552/z-energy-synlait-crash-on-earnings-downgrades.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+12+Sep+ 2019

Must have glossed over some, at least early indicative signs, that all was not well at their very recent (1 August 2019) investor day briefing.
From memory they were confident that the roll out of the Z pumped loyalty scheme to Caltex stations, (replacing Caltex's previous scheme) wouldn't cause any hiccups.
Funny thing is people don't like changes and probably prefer to stick with whatever loyalty scheme they currently have so volumes are down at Caltex. Basic human psychology that people don't like change but that seems to be something Z management were completely unaware of as recently as 1 August.

[winner69]

Z presentations always include

Forward looking statements are inherently fallible

So true in Z’s case

[winner69]

Beagle - I just went through that investor briefing of August 1st

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/338431/304464.pdf

I think Z management are bedazzled by the bull **** they themselves produce. As they say in Texas ‘all hat, no cattle’

Chart below not too good for last 2 years - love the way a company Produces historical stuff when it suits

[Beagle]

Crikey there's some serious quantities of corporate speak in there, enough to spin anyone's eyeballs and ears and as you suggest its quite possible they believe their own "speak" I really "like" page 58 wherein they talk about transitioning to a new way of competing and leveraging their "market leading" position so they can deliver earnings growth in a changing industry.
Yeah right...their new strategy is obviously working really well...
Wonder how many boffins they have on their payroll on $250k+ to come up with presentations like that one...

[bull....]

this could be a scandle for Z and tank the share price

Z Energy accused of raising prices before offering a discount
https://www.stuff.co.nz/business/115734431/z-energy-accused-of-raising-prices-before-offering-a-discount

[winner69]

this could be a scandle for Z and tank the share price

Z Energy accused of raising prices before offering a discount
https://www.stuff.co.nz/business/115734431/z-energy-accused-of-raising-prices-before-offering-a-discount

That guy must be pretty thick if he’s just noticed this rort ...been going for ages

He also probably hasn’t noticed he’s not paying the 10 cents Auckland region levy either - rest of the country ‘subsidising’ that

Shareholders should be proud of their company though - maximising shareholder returns and all that

[bull....]

That guy must be pretty thick if he’s just noticed this rort ...been going for ages

He also probably hasn’t noticed he’s not paying the 10 cents Auckland region levy either - rest of the country ‘subsidising’ that

Shareholders should be proud of their company though - maximising shareholder returns and all that

lol yes our local tends to raise prices often just after a big discount and then they drop back a week or so later to the price before the discount. scamming all round these loyalty schemes.

[winner69]

After yesterday’s wipe out will the share price go up today?

Divie of 48 cents for $5.70 is pretty good.

[Beagle]

After yesterday’s wipe out will the share price go up today?

Divie of 48 cents for $5.70 is pretty good.

11.7% inclusive of imputation credits is good, no question. Is the current level of dividend sustainable going forward though ? That as they say, is the $64,000 question.
Yesterday's drop did a lot of damage to the technical's with breaks of the 100 and 200 day moving average.
I think the risks are to the downside and another test of the $5.20 region wouldn't surprise me.

[ananda77]

11.7% inclusive of imputation credits is good, no question. Is the current level of dividend sustainable going forward though ? That as they say, is the $64,000 question.

For what its worth around my area, Z are consistently the most expensive.

"For what its worth around my area, Z are consistently the most expensive."

my 5 cents worth: I always knew I would not feel comfortable holding Z, but the yield was just too tempting. I bought a small number a shares (1253) at 6.54 - yield 6.5% fully imputed. Now I am a long term holder, most likely 5 years.

I always fill up at various Gull stations, because with Gull, you know what you get - no mucking about with bonus schemes and the likes, and I never stopped at Z...just the most expensive lot and for what reason?

I sometimes stopped at BP to use the bonus on the AA card, but it turned out, even with the bonus, they are more expensive then Gull.

Gull seems to be the most up-to-date retailer with their no gimmicks approach and with their speed lanes, to me its no wonder that other retailers are going to eat dirt.

Z IS my biggest mistake I have done in the market for the last 20 years+. Bugger...60m profit downgrade based on bonus schemes? You got to be kidding...This is stupid and I am stupid...

[RupertBear]

"For what its worth around my area, Z are consistently the most expensive."

my 5 cents worth: I always knew I would not feel comfortable holding Z, but the yield was just too tempting. I bought a small number a shares (1253) at 6.54 - yield 6.5% fully imputed. Now I am a long term holder, most likely 5 years.

I always fill up at various Gull stations, because with Gull, you know what you get - no mucking about with bonus schemes and the likes, and I never stopped at Z...just the most expensive lot and for what reason?

I sometimes stopped at BP to use the bonus on the AA card, but it turned out, even with the bonus, they are more expensive then Gull.

Gull seems to be the most up-to-date retailer with their no gimmicks approach and with their speed lanes, to me its no wonder that other retailers are going to eat dirt.

Z IS my biggest mistake I have done in the market for the last 20 years+. Bugger...60m profit downgrade based on bonus schemes? You got to be kidding...This is stupid and I am stupid...

If this is your biggest mistake in 20 years Ananda kudos to you! I have made much bigger mistakes in my much shorter time in the market. You are not stupid at all, you are in the same boat as people with much bigger holdings who will be sitting on much big losses so dont beat yourself up things could have been much worse.

I got out of my small holding recently only to see the sp jump up and I thought bugga, now I am feeling grateful. I also got out of SML recently and now I am feeling grateful for that. But I also hold Vista and I am way in the red with that one and not feeling grateful. So its swings and roundabouts eh ;)

[bull....]

plenty of sellers lining up , hrly bollinger show plenty of room to fall with a rising dmi

[winner69]

plenty of sellers lining up , hrly bollinger show plenty of room to fall with a rising dmi

So it’s not looking too good

[Beagle]

ananda77 - Don't beat yourself up. Best to accept that its simply not possible to win every single time you make an investment.
There are always going to be some losses along the way.
At the recent Kingfish annual meeting their chief investment officer said even the best fund managers only get 2/3 rd's of their decisions right.

My money is on this and Synlait both having another leg down despite yesterday's steep falls. Both will be buys again at some point in the future but both need to be de-risked.
A conclusion to the fuel price enquiry process might be the trigger point for a recovery with this one in due course in the same way as a resolution to the Pokeno fiasco would de-risk Synlait.

[percy]

"For what its worth around my area, Z are consistently the most expensive."

my 5 cents worth: I always knew I would not feel comfortable holding Z, but the yield was just too tempting. I bought a small number a shares (1253) at 6.54 - yield 6.5% fully imputed. Now I am a long term holder, most likely 5 years.

I always fill up at various Gull stations, because with Gull, you know what you get - no mucking about with bonus schemes and the likes, and I never stopped at Z...just the most expensive lot and for what reason?

I sometimes stopped at BP to use the bonus on the AA card, but it turned out, even with the bonus, they are more expensive then Gull.

Gull seems to be the most up-to-date retailer with their no gimmicks approach and with their speed lanes, to me its no wonder that other retailers are going to eat dirt.

Z IS my biggest mistake I have done in the market for the last 20 years+. Bugger...60m profit downgrade based on bonus schemes? You got to be kidding...This is stupid and I am stupid...

Warren Buffet states he gets 6 out of 10 investments right.

[couta1]

"For what its worth around my area, Z are consistently the most expensive."

my 5 cents worth: I always knew I would not feel comfortable holding Z, but the yield was just too tempting. I bought a small number a shares (1253) at 6.54 - yield 6.5% fully imputed. Now I am a long term holder, most likely 5 years.

I always fill up at various Gull stations, because with Gull, you know what you get - no mucking about with bonus schemes and the likes, and I never stopped at Z...just the most expensive lot and for what reason?

I sometimes stopped at BP to use the bonus on the AA card, but it turned out, even with the bonus, they are more expensive then Gull.

Gull seems to be the most up-to-date retailer with their no gimmicks approach and with their speed lanes, to me its no wonder that other retailers are going to eat dirt.

Z IS my biggest mistake I have done in the market for the last 20 years+. Bugger...60m profit downgrade based on bonus schemes? You got to be kidding...This is stupid and I am stupid... All part of the journey I've been in the same situation with AIR and TRA and realised the losses as well as sitting on eye watering paper losses a few times with the likes of A2. PS-If you havent lost you havent lived.

[macduffy]

Ananda 77 has a great investing record in the last 20 years by my standards. 1254 shares in Z down by a mere $1+ something the biggest mistake!

Wish I could do as well - with my 50 years' experience in the market!

Disc: Holding Z - and for what it's worth - expect a degree of recovery.

[couta1]

Ananda 77 has a great investing record in the last 20 years by my standards. 1254 shares in Z down by a mere $1+ something the biggest mistake!

Wish I could do as well - with my 50 years' experience in the market!

Disc: Holding Z - and for what it's worth - expect a degree of recovery. A bit like crying over spilt milk methinks, Beagle reckons he'd be seriously ill if he had to cope with my portfolio at times. Lol

[ananda77]

Jeez, I just need to stick with index derivatives, but there is hope nevertheless for Z Energy:

Latest ASB recommendation report
Valuation: $8.30Undervalued but there is time to purchase Last updated:13/09/19
No-Moat Z Energy Disappoints the Market With Guidance Downgrade; Our NZD 8.30 Fair Value Unchanged
Investment rating
After Shell's exit in 2010, Z Energy successfully increased its gross fuels margin by 65%. However, New Zealand transport fuel consumption has stagnated for more than a decade and we think optimising the fuels margin can only go so far. Further, we have reservations in the owning of a stake in New Zealand's only refiner, comparatively modest though it is. Refineries are low-margin and capital-intensive, but Z Energy has many favourable attributes that make it an attractive investment at the right price. Management has made proven market inroads where Shell took its eye off the ball. Z Energy has driven returns on invested capital admirably back above its cost of capital, a key plank in a sustainable business model.

Event

Impact

Recommendation impact (last updated: 13/09/2019)
--

Event analysis
No-Moat Z Energy Disappoints the Market With Guidance Downgrade; Our NZD 8.30 Fair Value Unchanged

Despite no-moat Z Energy downgrading its fiscal 2020 EBITDAF guidance by about 8% to NZD 390 million-NZD 430 million from NZD 425 million-NZD 465 million, our fair value estimate of NZD 8.30 stands. We continue see no long-term implication in the drivers, including unsustainable retail price competition and fuel discounting, exacerbated by cyclically low regional refiner margins. These are the same elements detracting from the current earnings of Australian counterparts Caltex Limited and Viva Energy Group. We think these metrics will favourably trend back to longer-term averages, and Z's infrastructure advantage should see it weather the storm as well as any.

Z also lowered its fiscal 2020 DPS guidance by about 0%-7.5% to NZD 0.48-NZD 0.50 from NZD 0.48-NZD 0.54. We lower our fiscal 2020 EBITDAF and DPS forecasts by 12% and 6% to guidance midpoint NZD 410 million and NZD 0.49, respectively. At the announcement-battered NZD 5.70 share price, down 10% on the day, the dividend translates to an even more appealing fully imputed 8.6% yield. Z's intention remains to pay out 70%-85% of free cash flow, where free cash flow is defined as replacement cost, or RC, EBITDAF less RC tax, financing costs, and long-term integrity capital expenditures. The focus is on returning cash to shareholders, and the company says there is no near-term need to allocate material capital to noncore investments in the pursuit of revenue stream diversification. We agree with this conservative course of action.

Yield is the key attraction, and the shares remain materially undervalued in relation to it. We suspect that the market is overly focused on the low growth outlook rather than the income appeal of the stock. We applaud Z's focus on shareholder returns. The company's strategy of optimising the asset base and improving operating efficiency continues to pay off--return on equity is consistently above Australasian peers, and we expect this to continue to support the yield if not growth.

[bull....]

There is hope nevertheless:

Latest ASB recommendation report
Valuation: $8.30Undervalued but there is time to purchase Last updated:13/09/19
No-Moat Z Energy Disappoints the Market With Guidance Downgrade; Our NZD 8.30 Fair Value Unchanged
Investment rating
After Shell's exit in 2010, Z Energy successfully increased its gross fuels margin by 65%. However, New Zealand transport fuel consumption has stagnated for more than a decade and we think optimising the fuels margin can only go so far. Further, we have reservations in the owning of a stake in New Zealand's only refiner, comparatively modest though it is. Refineries are low-margin and capital-intensive, but Z Energy has many favourable attributes that make it an attractive investment at the right price. Management has made proven market inroads where Shell took its eye off the ball. Z Energy has driven returns on invested capital admirably back above its cost of capital, a key plank in a sustainable business model.

Event

Impact

Recommendation impact (last updated: 13/09/2019)
--

Event analysis
No-Moat Z Energy Disappoints the Market With Guidance Downgrade; Our NZD 8.30 Fair Value Unchanged

Despite no-moat Z Energy downgrading its fiscal 2020 EBITDAF guidance by about 8% to NZD 390 million-NZD 430 million from NZD 425 million-NZD 465 million, our fair value estimate of NZD 8.30 stands. We continue see no long-term implication in the drivers, including unsustainable retail price competition and fuel discounting, exacerbated by cyclically low regional refiner margins. These are the same elements detracting from the current earnings of Australian counterparts Caltex Limited and Viva Energy Group. We think these metrics will favourably trend back to longer-term averages, and Z's infrastructure advantage should see it weather the storm as well as any.

Z also lowered its fiscal 2020 DPS guidance by about 0%-7.5% to NZD 0.48-NZD 0.50 from NZD 0.48-NZD 0.54. We lower our fiscal 2020 EBITDAF and DPS forecasts by 12% and 6% to guidance midpoint NZD 410 million and NZD 0.49, respectively. At the announcement-battered NZD 5.70 share price, down 10% on the day, the dividend translates to an even more appealing fully imputed 8.6% yield. Z's intention remains to pay out 70%-85% of free cash flow, where free cash flow is defined as replacement cost, or RC, EBITDAF less RC tax, financing costs, and long-term integrity capital expenditures. The focus is on returning cash to shareholders, and the company says there is no near-term need to allocate material capital to noncore investments in the pursuit of revenue stream diversification. We agree with this conservative course of action.

Yield is the key attraction, and the shares remain materially undervalued in relation to it. We suspect that the market is overly focused on the low growth outlook rather than the income appeal of the stock. We applaud Z's focus on shareholder returns. The company's strategy of optimising the asset base and improving operating efficiency continues to pay off--return on equity is consistently above Australasian peers, and we expect this to continue to support the yield if not growth.

asb moaningstar recommendations taken with a grain of salt

[macduffy]

asb moaningstar recommendations taken with a grain of salt

ALL recommendations should be taken with several grains of salt!

Caveat emptor, remember!

[bohemian]

I went to see my broker at Craigs two months ago with the view of investing in ZEL for yield. I was given a firm no, they often call it so much better than what I do, well worth the money I pay them IMO.

[Beagle]

A bit like crying over spilt milk methinks, Beagle reckons he'd be seriously ill if he had to cope with my portfolio at times. Lol

Happy to continue to take a prudent approach to risk management mate. https://en.wikipedia.org/wiki/Efficient_frontier

I really think Morningstar are miles off beam. Average valuation was $6.91 and it will be interesting to see where this ends up in a week or so when the analysts have all had a chance to crunch the numbers and revise their forecasts. https://www.marketscreener.com/Z-ENERGY-LTD-14473098/consensus/

[couta1]

Happy to continue to take a prudent approach to risk management mate. https://en.wikipedia.org/wiki/Efficient_frontier

I really think Morningstar are miles off beam. Average valuation was $6.91 and it will be interesting to see where this ends up in a week or so when the analysts have all had a chance to crunch the numbers and revise their forecasts. https://www.marketscreener.com/Z-ENERGY-LTD-14473098/consensus/ Hmmm risk management, yeah I reckon we have a different approach both on and off the skifield aye.

[winner69]

Hmmm risk management, yeah I reckon we have a different approach both on and off the skifield aye.

Couts - a worry that beagle is reading up efficient frontiers and all those clever things

[bull....]

savage selling on the close to finish on the lows. wonder how many were buying into that afternoon fake bounce?

[Beagle]

Hmmm risk management, yeah I reckon we have a different approach both on and off the skifield aye.

LOL, true that, I'm a pretty conservative dog that is keen to come back with all four paws intact and a waggly tail...don't forget what happened to Michael Schumacher on the ski field :eek2:

Anyway back to ZEL. They were the dearest in Queenstown too. Can't say I was surprised in the slightest. Remember their marketing punch line "Z is for New Zealand"...bit disingenuous to leave the word "shareholders" off the end of that punch line isn't it ! One guess who is paying for their feel good "Good in the hood community project funding program" Clue, it isn't the company.

I wasn't aware that they are alleged to have been manipulating their fuel discount loyalty program by raising the prices just before 10 cent pumped days as I don't fuel up at Z. Must admit even though I am quite cynical by nature, if this is true it surprises me they would stoop that low...

[blackcap]

Couts - a worry that beagle is reading up efficient frontiers and all those clever things

Wow blast from the past. That brings back memories of MOFI 201 or was it MOFI 310. Markowitz or something along those lines. That is some serious mathematical wizardry going on there.

But Beagle if you are going to follow this theory... pretty much you put your money into the whole market. (Ie index) No more picking stocks for you :P :)

[tuaman]

Wow. 20 million dollars worth of shares exchanged hands today. I hope new holders not gonna sell for some time.

[Beagle]

$21m+ Usually a bad sign when it falls so much on very high volume.
Last time I bought at $5.20 late last year it was on a forecast gross yield of 15% and there was no known risk from exiting from the loyalty scheme and Jacinda wasn't on a rampage regarding fuel company margins, (enquiry was live but Jascinda wasn't in full attack calling the fuel companies as "fleecing" N.Z. Motorists).
At present the forecast gross forecast yield at $5.53 and assuming the mid point of dividends 49 cents fully imputed = 49 / 0.72 = 68.05 / 553 = 12.3%.
I just don't know how long the excessive discounting will last, nobody does but I do know consumers are very resistant to change, (basic human psychology), so my central theme is heavier discounting for longer.

Then there's Jacinda who will be absolutely desperate to make political capital out of the fuel companies after effectively wiping out vast amounts of her political capital this week. Even though interest rates are a lot lower this year than last I think I'd need to see very close to that 15% again to get me tempted to buy back in given the extra risks this time. 68.05 / 0.15 suggests $4.54 as an apparently attractive point where all currently known risks are well and truly fully factored into the share price.

I remain of the view that last year's low of $5.18 is going to be tested in due course and it wouldn't surprise me if it charts a new lower low from there.
Keeping my powder dry at this stage.

[ananda77]

$21m+ Usually a bad sign when it falls so much on very high volume.
Last time I bought at $5.20 late last year it was on a forecast gross yield of 15% and there was no known risk from exiting from the loyalty scheme and Jacinda wasn't on a rampage regarding fuel company margins, (enquiry was live but Jascinda wasn't in full attack calling the fuel companies as "fleecing" N.Z. Motorists).
At present the forecast gross forecast yield at $5.53 and assuming the mid point of dividends 49 cents fully imputed = 49 / 0.72 = 68.05 / 553 = 12.3%.
I just don't know how long the excessive discounting will last, nobody does but I do know consumers are very resistant to change, (basic human psychology), so my central theme is heavier discounting for longer.

Then there's Jacinda who will be absolutely desperate to make political capital out of the fuel companies after effectively wiping out vast amounts of her political capital this week. Even though interest rates are a lot lower this year than last I think I'd need to see very close to that 15% again to get me tempted to buy back in given the extra risks this time. 68.05 / 0.15 suggests $4.54 as an apparently attractive point where all currently known risks are well and truly fully factored into the share price.

I remain of the view that last year's low of $5.18 is going to be tested in due course and it wouldn't surprise me if it charts a new lower low from there.
Keeping my powder dry at this stage.

IMO, going as low as 5.18 is usually a good incentive to test the 5. ...as for myself, will buy another 1253 below 5, say around 4.93...maybe an outlier, but usually, they have a good chance to be in the money. As long as panic persists, this may have a good chance of success

Oh hold on you talk about 4.54 well let's do it.

IMO, if price really goes below 5, then further price direction will depend on how price will try to trade above 5 again. A weak recovery above 5 will indicate failure and the most likely outcome will be 4.75 or 4.50.

[winner69]

"...........

I wasn't aware that they are alleged to have been manipulating their fuel discount loyalty program by raising the prices just before 10 cent pumped days as I don't fuel up at Z. Must admit even though I am quite cynical by nature, if this is true it surprises me they would stoop that low...

Suppose you believe in the tooth fairy as well or is it as the stuff article says just coincidence

Was $2.36 at Z in Wellington last night ....that’ll put a rein on overall consumer spending

[couta1]

Suppose you believe in the tooth fairy as well or is it as the stuff article says just coincidence

Was $2.36 at Z in Wellington last night ....that’ll put a rein on overall consumer spending And $2.12 just 30k up the road at Z Upper Hutt. Lol

[winner69]

And $2.12 just 30k up the road at Z Upper Hutt. Lol

..somebody has to pay that horribly unfair Auckland Region Fuel Tax .....and the Jafas don’t appreciate it and still moan their heads off.....as Fred would say they don’t know how lucky they are

[Baa_Baa]

Was $2.36 at Z in Wellington last night ....that’ll put a rein on overall consumer spending

That Z shop doesn't sell 95 octane either does it? So $2.36 / litre for 91. :scared:

[Beagle]

Suppose you believe in the tooth fairy as well or is it as the stuff article says just coincidence

Was $2.36 at Z in Wellington last night ....that’ll put a rein on overall consumer spending

Its highway robbery right on taxcinda's, opps sorry Jacinda's, doorstep in Wellington. No wonder she thinks the fuel companies are "fleecing" Kiwi's.
As Coutts suggests just up the road where there's a Gull they are forced to play nice.
I really didn't imagine they would stoop that low to raise prices before a 10 cent discount day. Suppose that makes me a little commercially naïve and / or makes Z extremely manipulative and possibly deserving of regulatory oversight. If such a thing is on public display for those that take note to have noticed, it really makes you wonder how dirty things are behind the scenes.

Maybe there is something in Jascinda's determination to bring more competition into the wholesale market and I wonder what the Govt will do about it ?
Has she got some brownie points to be won back from the public after this week or what !

So in terms of notable next events to chart a path to this being possibly de-risked.
First up we have the half year results, (which last year were announced on 1 November). I think at that point ZEL would have a better handle on how the change in loyalty scheme is affecting margins, (they will have full month impact for August and September and indicative impact for October by then), and what the full year prognosis is for that so its highly likely we'll get a full year guidance update at that point.
Then there's the final recommendations of the fuel study, sorry can't remember when that's going to be released, can anyone help with a timeline on that ?

[macduffy]

Then there's the final recommendations of the fuel study, sorry can't remember when that's going to be released, can anyone help with a timeline on that ?

Did it go something like "This year next year sometime never"?

;)

[winner69]

This week’s announcement reports on both lost volume and reduced margins .....double ouch

Sept quarter stats will be interesting .... esp their market share.....which hasn’t been growing of late.

Maybe their ‘strategy’ is a bit wonky ....takes more than a few buzz words and cool presentations to win.

[winner69]

Z industry lingo is rather confusing for plebs but like me

When I read this in the June quarter stats I thought it was quite positive - The percentage of fuel sold on discount decreased during the quarter .... ...sort of suggests less discounting ...good

From last week’s announcement re their margin problem maybe that Statement in July meant something else.

[Beagle]

I was really impressed with their earlier presentation when it said instore weekly sales were up 10% year on year as its instore where the "fleecing" really does goes on.
Fuel margins and volume must be under really intense pressure to get a downgrade of that magnitude barely a month after the new loyalty scheme has started.

I'm going to call it and remember who did it first. This is NOT their last downgrade of the FY20 year ! Mark my words.

[winner69]

It seems that the millions of AIRPOINTS members aren’t doing their bit.

Wasn’t that a game changer .....at least the excitement when it was announced suggested so

[Leftfield]

It seems that the millions of AIRPOINTS members aren’t doing their bit.
Wasn’t that a game changer .....at least the excitement when it was announced suggested so

IMHO this is the crux of Z's margin/profitability issues.

Put simply Airpoints/Flybuys etc only serve to confuse price comparison and the public are are increasingly sceptical that they provide any value (or reason to buy Z over other fuel suppliers.)

(Airpoints/Flybuy's are also relatively more expensive/inefficient for a company to run as compared to cut price offers.)

As a result I suspect fuel companies that offer a clear simple price saving are the companies that consumers are increasingly switching to (and Z's margin issues are evidence of this.)

[BlackPeter]

IMHO this is the crux of Z's margin/profitability issues.

Put simply Airpoints/Flybuys etc only serve to confuse price comparison and the public are are increasingly sceptical that they provide any value (or reason to buy Z over other fuel suppliers.)

(Airpoints/Flybuy's are also relatively more expensive/inefficient for a company to run as compared to cut price offers.)

As a result I suspect fuel companies that offer a clear simple price saving are the companies that consumers are increasingly switching to (and Z's margin issues are evidence of this.)

I agree. We certainly started to avoid companies who offer complicated discount schemes (unless they are straight forward volume discounts) whenever there is a better alternative available. I assume other consumers learn as well ;);

[dreamcatcher]

Saudi oil production cut by 50% after drones attack crude facilities

“Fearing the worst, I expect that the market will open up $5 to $10 per barrel on Sunday evening. This is 12 to 25 cents per gallon for gasoline.”

https://www.cnbc.com/2019/09/14/saudi-arabia-is-shutting-down-half-of-its-oil-production-after-drone-attack-wsj-says.html

[winner69]

I agree. We certainly started to avoid companies who offer complicated discount schemes (unless they are straight forward volume discounts) whenever there is a better alternative available. I assume other consumers learn as well ;);

Z seem hell bent on loyalty / experience being the way to win

However there own research seems to say that punters want quick, convenient and fair price service as per this slide in recent presso.

[Tomtom]

“Fearing the worst, I expect that the market will open up $5 to $10 per barrel on Sunday evening. This is 12 to 25 cents per gallon for gasoline.” Hopefully, that might prompt the public to thoroughly examine the existing governments energy policy.

[Jay]

tend to use whatever discount gives us the lowesr price, if we get flybuys/airpoints that is a bonus and with Z not the cheapest around our way most of the time.
In recent times tended to use Caltex(while still a member of AA fuel plan) or BP or Pak n save fuel, can't remember the last time I used Mobil, occasionally Z

[horus1]

A lot of new cheap stations being built ,will not use Z but only basic discounted fuel . Wont touch share.

[Leftfield]

Z seem hell bent on loyalty / experience being the way to win.

Maybe they should sign up with PLX to run their new app based loyalty/discount programme..... :t_up:

(Flybuys is sooo yesterday!)

[Baa_Baa]

Maybe they should sign up with PLX to run their new app based loyalty/discount programme..... :t_up:

(Flybuys is sooo yesterday!)

Exactly, wonder if they even know about the PLX Fuel App? And all the goodies for loyalty programmes.
https://www.7eleven.com.au/fuel-app

Plexure worked with 7-Eleven to develop the Fuel Price Lock App, which has transformed the way customers buy fuel and convenience items.
http://www.plexure.com/why-plexure

[winner69]

There’s over 300,000 punters who’ve downloaded the Z App

Apparently your coffee is ready and waiting for you if one uses the app.

[winner69]

A high oil price is good for Z — isn’t it?

AA says we need to brace for petrol hikes next week

[peat]

tend to use whatever discount gives us the lowesr price, if we get flybuys/airpoints that is a bonus and with Z not the cheapest around our way most of the time.
In recent times tended to use Caltex(while still a member of AA fuel plan) or BP or Pak n save fuel, can't remember the last time I used Mobil, occasionally Z

Pak N Save uses fuel supplied by Z (in case you didn't realise)

[ananda77]

so far, around 5 for a permanent risk premium in crude should be it, considering the current oil glut. To cover global risk and with global debt in default, long bonds seems to be a better option to cover risk. Euroschatz Cash trading at the 200 MA on the daily time frame...and net long gold taking profit on the short side at 1379.7

[boysy]

Think that’s being a bit optimistic the market still believes what SA is saying that they will have the facility back up and running in the short term - not sure if you have seen the videos but it looks a lot worse damage than SA are reporting public ally anyway ....

[Jay]

[QUOTE=peat;771570]Pak N Save uses fuel supplied by Z (in case you didn't realise)[/QUOTE
I knew they changed from BP to Mobil or other way around, did not realise has changed again, not used them for a little while, as local Caltex was the cheapest around most of the time (before discounts). Z still a couple of cents dearer most days than the Pak n Save which is more or less next to them.


Cameron Bagrie economist reputedly saying could go to $3 - bit OTT I think, other sources saying 10cents if it is longer term.
Will be interesting to see how fast they put it up - good excuse too!
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12267969

Oil up 19pc last I saw - these things tend to overshoot though, does not help us in the short term (price wise)

Disc: Not holding at present

[BlackPeter]

Pak N Save uses fuel supplied by Z (in case you didn't realise)

Who cares who supplies the fuel? Most of it is anyway coming out of the the same tap in Marsden point ...

Only difference is the price ...

[winner69]

And the nzd collapsing won’t help pump prices

[winner69]

A high oil price is good for Z — isn’t it?

AA says we need to brace for petrol hikes next week

High oil price must be good for Z

Share price on way back up again

[Beagle]

Think there's some sweet spot range, from memory $50-60 USD per barrel.

[ananda77]

With yields collapsing, that would be beneficial for Z, if they could refinance cheaper? Problem would be, with a continous slow debt default, would be good to lock in yields at a point where they have bottomed out...like maybe at negative 25%?

Maybe someone can answer this question re: the profit downgrade of 60m. Could the real reason for the downgrade be that Z has to pay now relatively more for its existing debt?

[Beagle]

With yields collapsing, that would be beneficial for Z, if they could refinance cheaper? Problem would be, with a continous slow debt default, would be good to lock in yields at a point where they have bottomed out...like maybe at negative 25%?

Maybe someone can answer this question re: the profit downgrade of 60m. Could the real reason for the downgrade be that Z has to pay now relatively more for its existing debt?
No - clearly stated, retail margin pressure = ~ $50m downgrade effect and refinery margin pressure ~ $10m impact.
Z have come out swinging in terms of their position regarding the draft fuel report. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340992/307703.pdf
A very brief skim read, (sorry don't have any more time today than that) would tend to indicate Z have conceded some change in key area's is needed including wholesale fuel arrangements.

As stated last week, I suspect there is more to come from retail margin pressure and Govt regulatory pressure than what has already been provided for in the $60m downgrade. Further, the commercial effect of any ground that ZEL may have conceded in their submission is yet to make itself apparent in lower profits going forward.

More here http://www.sharechat.co.nz/article/2f17935a/z-energy-demands-comcom-fix-material-inaccuracies-in-fuel-report.html?utm_medium=email&utm_campaign=Z%20Energy%20demands%20ComCom%20fix%2 0material%20inaccuracies%20in%20fuel%20report&utm_content=Z%20Energy%20demands%20ComCom%20fix%20 material%20inaccuracies%20in%20fuel%20report+CID_f 81c99c89912a70369e484126e536423&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle2f17935az-energy-demands-comcom-fix-material-inaccuracies-in-fuel-reporthtml

[winner69]

That statement re CC Report is almost an invitation to the other players to ‘get together’ and make pricing simpler .....hmm .....code for?

[Beagle]

code for... increased transparency going forward which usually leads to lower margins doesn't it ?
For example having to put the premium grade fuel on the price board will shine the spotlight on how margins for 95 and 98 Octane have been creeping up significantly in recent years, one of the ComCom's points of significant criticism.

[peat]

i seriously wonder if not only the rise of Gull and Waikato but also the Gaspy app is creating pressure on petrol suppliers who are pushing the envelope in terms of margins, and thus helping to condense those margins.
It is now so much easier to compare all types of the different fuel prices at different stations.

[percy]

i seriously wonder if not only the rise of Gull and Waikato but also the Gaspy app is creating pressure on petrol suppliers who are pushing the envelope in terms of margins, and thus helping to condense those margins.
It is now so much easier to compare all types of the different fuel prices at different stations.

Not just petrol,but all goods and services we use or want.

[cyclist]

i seriously wonder if not only the rise of Gull and Waikato but also the Gaspy app is creating pressure on petrol suppliers who are pushing the envelope in terms of margins, and thus helping to condense those margins.
It is now so much easier to compare all types of the different fuel prices at different stations.

Indeed. And when travelling around the country, with Gaspy its even possible to compare between towns along your route and optimise where you fill up on that basis too. (e.g. travelling to Wellington, make sure you have enough in the tank to get back to Levin for example).

[Lego_Man]

i seriously wonder if not only the rise of Gull and Waikato but also the Gaspy app is creating pressure on petrol suppliers who are pushing the envelope in terms of margins, and thus helping to condense those margins.
It is now so much easier to compare all types of the different fuel prices at different stations.

Weird name. Always the ambiguity as to whether it is pronounced Gas-py or Gasp-y. Mind you, i suppose it gets people gasping at the price differentials between stations.

[sb9]

Just landed an email in my inbox stating BP has removed minimum spend ($40) to avail regular or any special discount under AA Smartfuel scheme.

[sb9]

Weird name. Always the ambiguity as to whether it is pronounced Gas-py or Gasp-y. Mind you, i suppose it gets people gasping at the price differentials between stations.

I think it is pronounced as Gas-spy, however with letter 's' being used only once in their app naming.

[Beagle]

Just landed an email in my inbox stating BP has removed minimum spend ($40) to avail regular or any special discount under AA Smartfuel scheme.

Still need to spend $40 minimum to accumulate discount rewards, no minimum to redeem them. A very, very small extra bit of pressure on other competitors, nonetheless.
Agree that Gaspy (or however you spell it) is placing more pressure on margins and the minnows are nibbling away at market share.
ZEL talk a bit about the long term prognosis for EV's to eat into fuel volume in their submission on the fuel price enquiry today...not something you read about in their other presentations to shareholders...Hmmmm

[winner69]

ZEL talk a bit about the long term prognosis for EV's to eat into fuel volume in their submission on the fuel price enquiry today...not something you read about in their other presentations to shareholders...Hmmmm

hmmm indeed .....Z presentations give themselves the warm fuzzies (which are passed onto shareholders) but reality is another thing

A few other popular companies do this as well .....suppose thats how the world works these days ....but not that hard to separate out the reality from the dreams

[Beagle]

Yeap, these days you need good FA, TA and for many companies DA (Deciphering analysis) of their creative corporate speak.
Reality is starting to bite for ZEL shareholders now. Despite an aggressive rebuttal of certain aspects of the Govt's fuel study analysis and extensive submissions today on same and yet another analysts briefing to explain all this, the market keeps on marking this one down for the third day running now.

Risky time to be a ZEL shareholder. Next step in clarifying all this is probably the half year result (reported last year 1 November).
Disc: Intending to stay on the sidelines until at least 1 November 2019.

[ananda77]

No - clearly stated, retail margin pressure = ~ $50m downgrade effect and refinery margin pressure ~ $10m impact.
Z have come out swinging in terms of their position regarding the draft fuel report. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/340992/307703.pdf
A very brief skim read, (sorry don't have any more time today than that) would tend to indicate Z have conceded some change in key area's is needed including wholesale fuel arrangements.

As stated last week, I suspect there is more to come from retail margin pressure and Govt regulatory pressure than what has already been provided for in the $60m downgrade. Further, the commercial effect of any ground that ZEL may have conceded in their submission is yet to make itself apparent in lower profits going forward.

More here http://www.sharechat.co.nz/article/2f17935a/z-energy-demands-comcom-fix-material-inaccuracies-in-fuel-report.html?utm_medium=email&utm_campaign=Z%20Energy%20demands%20ComCom%20fix%2 0material%20inaccuracies%20in%20fuel%20report&utm_content=Z%20Energy%20demands%20ComCom%20fix%20 material%20inaccuracies%20in%20fuel%20report+CID_f 81c99c89912a70369e484126e536423&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle2f17935az-energy-demands-comcom-fix-material-inaccuracies-in-fuel-reporthtml

I agree, this squeeze may just be the beginning. Margins must have been high for the last few years. How could the entrance of new players be explained otherwise?

So for now living with a big mistake - 1253 shares at 6.54 - but margins can only go so low. The question is how low?
The Com Com reckons margins should come closer to a 8.3% return on cost of capital. Z is ranking at 23%. So somewhere in there is a point where Z becomes an attractive buy.

[Beagle]

I agree, this squeeze may just be the beginning. Margins must have been high for the last few years. How could the entrance of new players be explained otherwise?

So for now living with a big mistake - 1253 shares at 6.54 - but margins can only go so low. The question is how low?
The Com Com reckons margins should come closer to a 8.3% return on cost of capital. Z is ranking at 23%. So somewhere in there is a point where Z becomes an attractive buy.

ZEL saying today their return on capital employed on selling fuel is just 11%. They go on to say that the fuel study incorrectly includes their profit on retail sales from their stores.
Weekly retail store sales are from memory up 10% year on year to circa $37K per store. ZEL must make a LOT of money from pies, icecreams and coffee and they infer as much from their fuel price study submissions today. Instore retail non fuel sales....that's where customers really are "fleeced".
ZEL will be hoping Jascinda and her team doesn't take any issue with the retail store side of their operations where the fleecing really does go on and that the fuel price study correctly excludes any profit from that side of their operations...but what if the Govt take a view that all aspects of ZEL's operations are one integral business and regulate a maximum return on invested capital ?
I still see plenty of regulatory risk here even after the recent fairly hefty share price correction, risks seem comfortably outweighed by possible returns to me.
$4.50 would be required to get me interested in investing anytime before further clarity is forthcoming on or about 1 November.
ZEL really make "quite a big meal" about the fact that they're a Kiwi company employing Kiwi people and that profits stay in Kiwi hands...a really big patriotic play in their submission on the fuel price enquiry today. I think that carries about as much weight as a butterfly to be quite frank.

[percy]

Perhaps ZEL should now be called a "Consumer Unstable".?...............lol.

[Beagle]

LOL still a consumer staple but obviously subject to regulatory oversight.
Remember when Rob Muldoon capped interest rates at 8% ?...that was a big hit with consumers. Jascinda must be really desperate to regain some political capital after last weeks almost complete self destruction of her credibility, (what sexual assault complaint ?, is there a single person in N.Z. who really believes she knew nothing ?), so the fuel companies better look out, Jascinda is on the warpath !

[winner69]

Fuel Gross Margin $700m. ...Non Fuel Gross Margin $81m

Lots of money in bakery and pies and coffee etc

[ananda77]

$4.50 would be required to get me interested in investing anytime before further clarity is forthcoming on or about 1 November.
ZEL really make "quite a big meal" about the fact that they're a Kiwi company employing Kiwi people and that profits stay in Kiwi hands...a really big patriotic play in their submission on the fuel price enquiry today. I think that carries about as much weight as a butterfly to be quite frank.

...anywhere between 4.50 and 4.75 will be the sweet spot. Hang in there stupid me and do good next time!

[horus1]

I do not think there was a sexual assault. They should have gone to the police. Z needs to be moderated . Do not buy the shares.

[couta1]

The good old Com Com exhibiting their ineptness once again by doing a half baked ,full of errors job. Look for an egg on face backtrack in the not too distant future. Lol

[winner69]

I take it Mr Bennett will come out fighting against this report.

I think it says the oil companies need to do less thinking about resilience and actually spend some money to ensure there is always enough jet fuel (as a minimum)

Whoops - can’t spend too much else divie will be cut

https://www.stuff.co.nz/business/115811300/fuel-firms-told-to-invest-at-auckland-airport-by-june-or-government-should-step-in

[peat]

but who are the people who need the resilience of supply?
and if they wont contribute (which they wont of course) then it can only be through the pricing mechanism that the cost of the infrastructure is apportioned correctly.

[winner69]

Suppose you believe in the tooth fairy as well or is it as the stuff article says just coincidence

Was $2.36 at Z in Wellington last night ....that’ll put a rein on overall consumer spending

That 235.9 is now 241.9

Jeez - that fuel arrived quick ...or maybe a promo later this week

Nomargin pressure this week. ..shareholders rejoice

[winner69]

Apparently z increased price by 10 cents to 245.9 but others didn’t follow so lowered it a fraction to 241.9

A few kms away Caltex and Waitomo at 208

[Antipodean]

Still filling up at Z (am I one of the few by recent comments in this thread?), geographically convenient for me and I find their pay at pump better than BP (my other main option). My time is more valuable than the pump price differentials. I also sometimes contribute to the "pies and coke" fund. I have also held Z stock on an off over the years so cannot rule that out for 'clouding' my opinion. Currently 'on' and not selling.

In the end the com com final report will recommend X amount of things, and if the govt will implement Y of them - with Y being significantly less than X and potentially 0. Look no further than tax working group for a baseline of all the political hullabaloo eventuating to no real change at the end of the process.

Which means many investors - myself also as top up oppourtunities - will be looking closely at this as a continued yield play.

[bull....]

amazing how quick petrol companies are to raise prices. yet we have had numerous instances of oil falling 5 dollars a barrel lately and petrol prices never moved or if they did it was a week or two later by only a few cents lol.

[Sideshow Bob]

I go to the local transport company, and pay with my card. When I filled up Friday, diesel was 132.9 which aligns with cheapest in say Tauranga. Card then gives an extra 6c/litre discount.

Compare that to the main street in town, yesterday it was 173.9 - and they'll take the opportunity today to lift further for sure.

Always 40c/litre difference at least. So who is making money???

[Beagle]

https://www.stuff.co.nz/business/115847283/gull-promises-to-hold-prices-to-weekend-as-other-petrol-firms-also-watch-and-wait#comments

ZEL tried to increase prices 9 cents per liter today but was forced to backtrack after BP only went up 6 cents.
Meanwhile based on actual input costs if they are sustained GULL say pricing will need to go up by about 6 cents per liter but they are holding off until at least this Saturday.
I think its pretty clear who is trying to lead the market higher and most quickly and I am absolutely certain others are taking notes too.
More than 300 comments to this article for those that want to have a good trawl through what others are thinking.

[winner69]

https://www.stuff.co.nz/business/115847283/gull-promises-to-hold-prices-to-weekend-as-other-petrol-firms-also-watch-and-wait#comments

ZEL tried to increase prices 9 cents per liter today but was forced to backtrack after BP only went up 6 cents.
Meanwhile based on actual input costs if they are sustained GULL say pricing will need to go up by about 6 cents per liter but they are holding off until at least this Saturday.
I think its pretty clear who is trying to lead the market higher and most quickly and I am absolutely certain others are taking notes too.
More than 300 comments to this article for those that want to have a good trawl through what others are thinking.

Good news for Z shareholders

[winner69]

https://www.stuff.co.nz/business/115847283/gull-promises-to-hold-prices-to-weekend-as-other-petrol-firms-also-watch-and-wait#comments

ZEL tried to increase prices 9 cents per liter today but was forced to backtrack after BP only went up 6 cents.
Meanwhile based on actual input costs if they are sustained GULL say pricing will need to go up by about 6 cents per liter but they are holding off until at least this Saturday.
I think its pretty clear who is trying to lead the market higher and most quickly and I am absolutely certain others are taking notes too.
More than 300 comments to this article for those that want to have a good trawl through what others are thinking.

Apparently there was going to be a Pumped promo of 10 cents a litre off tomorrow .....been canned

[winner69]

Close at 534 today

Getting close to 4 year lows

They won’t be touting that total shareholder return chart in their presentations for a while I reckon.

[Beagle]

Good news for Z shareholders

I'm not so sure it is. I suspect more and more people are starting to question the way ZEL go about doing their business.
Raising the prices before a 10 cent pumped day, if this is really common practice, makes me feel quite uncomfortable.

[bull....]

oil prices plummeting

Oil drops 6% after Saudi energy minister says supply will be fully restored by end of Septemberhttps://www.cnbc.com/2019/09/17/oil-slips-following-the-biggest-climb-in-history-after-saudi-attacks.html


be interesting how quick they are to drop pump prices , took 2 days to jump them.

[winner69]

BP have 10 cents off today (if you have right card or whatever). That’ll cost them plenty after yesterday’s price rise

Z making even more — they canned their promo

Good for Z shareholders

[Beagle]

oil prices plummeting

Oil drops 6% after Saudi energy minister says supply will be fully restored by end of Septemberhttps://www.cnbc.com/2019/09/17/oil-slips-following-the-biggest-climb-in-history-after-saudi-attacks.html


be interesting how quick they are to drop pump prices , took 2 days to jump them.

So ZEL should lead the market lower with a 6 cent price drop tomorrow. I think there's more chance I'll see a herd of pink pigs fly past my office window.
GULL are going to come out of this smelling like Roses. Holding the price until at least Saturday this week and absorbing the very temporary increase in oil costs.

[ananda77]

The commission’s draft report last month found all the players were earning at least twice the 8.6 percent return it estimated as the upper bound for the industry’s weighted average cost of capital. Gull was the highest at about 28 percent, followed by a grouping of Waitomo, NPD and GAS at almost 25 percent, and Z Energy at almost 23 percent. Mobil and BP came in at close to 20 percent and 18 percent respectively.

How does Gull keep such a high margin, yet no one would say, they are expensive, I certainly don't. Could it be, that the costs of maintaining complicated bonus schemes are high?

[Beagle]

Gull importing fully refined fuel to Tauranga port (as I understand it) and trucking it to retailers.
Many unmanned stations and obviously they don't need dozens of executives on many hundred's of thousands each to help to put together huge presentations to shareholders full of heaps of choice buzzwords. Just a really simple, modestly capital intensive and no corproate B.S. operation.

[ananda77]

Gull importing fully refined fuel to Tauranga port (as I understand it) and trucking it to retailers.
Many unmanned stations and obviously they don't need dozens of executives on many hundred's of thousands each to help to put together huge presentations to shareholders full of heaps of choice buzzwords. Just a really simple, modestly capital intensive and no corproate B.S. operation.

...streamlined as business needs to be.

[steveb]

Which is why none of the big boys are keen to take Gull on.

I passed my local Z yesterday on the way to work,they had put their price up to 2.29 a litre from 2.17 the day before,a massive 12c a ltr!.I didn't notice if they had reduced prices during the day,but it does indicate that no-one seems to know what they are doing at Z

[Beagle]

Which is why none of the big boys are keen to take Gull on.

I passed my local Z yesterday on the way to work,they had put their price up to 2.29 a litre from 2.17 the day before,a massive 12c a ltr!.I didn't notice if they had reduced prices during the day,but it does indicate that no-one seems to know what they are doing at Z

Surely not...they keep reminding us that Z is "for New Zealand"...bit disingenuous to leave the word "shareholders" off the end of that marketing catch cry eh :)

[sb9]

Which is why none of the big boys are keen to take Gull on.

I passed my local Z yesterday on the way to work,they had put their price up to 2.29 a litre from 2.17 the day before,a massive 12c a ltr!.I didn't notice if they had reduced prices during the day,but it does indicate that no-one seems to know what they are doing at Z

Not just Z, have seen pump prices both at BP and Mobil went up y'day and both are doing discount day today. In fact BP was the first one to put up prices by 6c y'day arvo.

[macduffy]

The poor Aussies have it hard - "Oil may get to $2 and that may be the straw that breaks the economy's back!".

https://www.abc.net.au/news/2019-09-18/oil-price-spike-adds-another-risk-to-fragile-economy/11521398?section=business

Personally, I think the effect of the drone strikes has been overdone. The Americans had to bomb the Ploesti oil installations heavily and repeatedly during WW11 before any lasting damage was inflicted.

[bull....]

Z and BP won't reverse price rise on Wednesday despite oil price drop
Z chief executive Mike Bennetts said when it increased its prices on Tuesday it "didn't reflect all of the increase in the price of the barrel, as we had planned to move the price by 3 cents on that day anyway".

"We took on the other 3 cents because we know it's hard when prices go up so we wanted to keep it affordable as we could," he said

https://www.stuff.co.nz/business/115879881/hope-for-motorists-as-oil-prices-drop-on-saudi-optimist-and-higher-inventories

probably why the price was up today extra profits from the price increase

[Beagle]

Z chief executive Mike Bennetts said when it increased its prices on Tuesday it "didn't reflect all of the increase in the price of the barrel, as we had planned to move the price by 3 cents on that day anyway".

"We took on the other 3 cents because we know it's hard when prices go up so we wanted to keep it affordable as we could," he said.

WTF ????? Not only does this not make any commonsense it looks very much like duplicitous propaganda.
They just can't seem to stop shooting themselves in the foot.
Time to switch to Gull.
P.S. Local Mobil this evening had reversed the 6 cent increase earlier this week and is running a 10 cent discount day.
$2.05 for 91 Octane is not too bad inclusive of the thievery Auckland transport levy of 11.5 cents per liter and all the other Government taxes and levies.

[peat]

I drove to Welly and back today and saw 241.8c in Pauatahnui, and it wasn't from a Z
But its only 202 in Whanganui. Driving down this coast what I notice is that the prices are so variable. Even in the same town there is a lot of variation ,(though not as much as in different towns)
I'm seeing about 6c variation for the no frills option , Gull is cheapest and then Z and the others are a couple of cents dearer even after any discounts that may be available.

I think the competition is actually quite tight most places but where it isn't they screw ya. I don't know enough about it to suggest a solution but surely it doesn't cost 40c a litre to move fuel from Whanganui to Pauatahanui

[Beagle]

Gulls CEO calls other fuel companies "jumping the gun and being over the top". That's fighting talk for someone who's usually fairly conservative.
https://www.msn.com/en-nz/news/national/bp-z-defend-6-cent-fuel-price-hike-after-concerns-about-supply-eased/ar-AAHsIGF?ocid=spartandhp
Wonder if Jascinda has noticed the $2.40 per liter rort right on her doorstep in Wellington ?
No decent ports there so transport costs must be "astronomical" and that must explain the huge prices right ?

[winner69]

Gulls CEO calls other fuel companies "jumping the gun and being over the top". That's fighting talk for someone who's usually fairly conservative.
https://www.msn.com/en-nz/news/national/bp-z-defend-6-cent-fuel-price-hike-after-concerns-about-supply-eased/ar-AAHsIGF?ocid=spartandhp
Wonder if Jascinda has noticed the $2.40 per liter rort right on her doorstep in Wellington ?

Jacinda has a chaffuer ......wouldnt have a clue how much fuel costs.

She might bring it up with Donald next week though

[Beagle]

Z and BP come in for sharp criticism from the AA as well https://www.stuff.co.nz/business/115889842/unusual-for-two-petrol-stations-just-kilometres-apart-to-have-a-33-cent-price-difference-aa
Gull looking to muscle in on the massive Auckland Jet fuel market. http://www.sharechat.co.nz/article/34191d2c/auckland-jet-fuel-arrangements-a-potential-barrier-to-new-entrants.html?utm_medium=email&utm_campaign=Auckland%20jet%20fuel%20arrangements% 20a%20potential%20barrier%20to%20new%20entrants&utm_content=Auckland%20jet%20fuel%20arrangements%2 0a%20potential%20barrier%20to%20new%20entrants+CID _d043eb31b63f6984afe14694c2441ca7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle34191d2cauckla nd-jet-fuel-arrangements-a-potential-barrier-to-new-entrantshtml

[stoploss]

Z and BP come in for sharp criticism from the AA as well https://www.stuff.co.nz/business/115889842/unusual-for-two-petrol-stations-just-kilometres-apart-to-have-a-33-cent-price-difference-aa
Gull looking to muscle in on the massive Auckland Jet fuel market. http://www.sharechat.co.nz/article/34191d2c/auckland-jet-fuel-arrangements-a-potential-barrier-to-new-entrants.html?utm_medium=email&utm_campaign=Auckland%20jet%20fuel%20arrangements% 20a%20potential%20barrier%20to%20new%20entrants&utm_content=Auckland%20jet%20fuel%20arrangements%2 0a%20potential%20barrier%20to%20new%20entrants+CID _d043eb31b63f6984afe14694c2441ca7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle34191d2cauckla nd-jet-fuel-arrangements-a-potential-barrier-to-new-entrantshtml

The AA guy is all talk . They have a fuel discount scheme with one of the majors do they ever do any of their members a favour ...... NO .
So as we know where Gull & Waitomo have gone , within close proximity the majors compete ....But further away you still get stuffed .
Time the AA backed the little guy and rewarded all their members with a decent scheme with a company that wants to actually deliver a decent result to the consumer IE : Cheaper fuel.

[Beagle]

Fair enough and I agree, he's all bark and no bite :)
Pretty good dead cat bounce today. MEOW :)

[Beagle]

That dead cat has had another bounce today. Must have a bit of Snow Leopard in it, seems to have bounced pretty good.
Think I'll still wait for the Taxcinda steamroller though to flatten things down again.

[Jim]

That dead cat has had another bounce today. Must have a bit of Snow Leopard in it, seems to have bounced pretty good.
Think I'll still wait for the Taxcinda steamroller though to flatten things down again.

Z Energy rose 0.9 percent to $5.55 on a volume of 2.3 million shares. The fuel retailer has been recovering having shed as much as 19 percent during the course of a week after it issued a profit warning on unprecedented discounting by its rivals and as investors weighed up the impact on fuel prices of recent attacks on Saudi Arabian processing facilities.

THE EXCITING PART OF THE STORY

"It's got down to a level that gets yield investors really excited," Williamson said. Z is trading at a gross dividend yield of about 10.9 percent

[Beagle]

I don't think much of his maths capabilities.
Company guidance is 48-50 cps in fully imputed dividends, mid point 49. Grossing 49 up for imputation credits = 49 / 0.72 = 68.06 / 555 = 12.3% Gross yield.
With all the issues the company is facing that I've previously alluded too, that's not enough to get me back on board at this stage and I will need to see the company de-risked in terms of the conclusion to the fuel price enquiry and the jet fuel storage and supply situation at Auckland airport.

I also think the CEO is doing a superb job at shooting the company in its foot with his recent public relations double speak.

I think its clear enough the minnows are very gradually nibbling away at their market share and compounding the long term headwinds is the very slow, (albeit at glacial pace), but inexorable shift to electric vehicles. These things must be factored in when looking at yield.
I leaned my lesson with sunset industries with relying on the yield of NZME and others have learned this very harsh lesson through SKY.

[BlackPeter]

That dead cat has had another bounce today. Must have a bit of Snow Leopard in it, seems to have bounced pretty good.
Think I'll still wait for the Taxcinda steamroller though to flatten things down again.

10776

Beautiful gap for people who like to play them, but not for the fainthearted. Overall trend pointing downwards - and while the share might be at this stage a plaything for traders, it appears to be quite risky for long term investors.

Not my cup of tea ...

[Beagle]

https://www.stuff.co.nz/business/116036466/z-and-bp-warn-watchdog-that-lower-petrol-margins-could-mean-station-closures

Mark 5 December 2019 down in your diary as the date the Com Com come out with their final report.
Then the grandstanding by Jascinda after that in her usual way to try and tell us that fuel companies are fleecing us when its perfectly obvious who is really fleecing us.
This one is a real political hot potato with an election next year. Regulatory risk is something that I think one ignores at their peril...

[Joshuatree]

At least have the decency tospell her name right.
Both govts have added fuel taxes pretty well equally and its user pays for you jafa's , fair enough too.Too many years of not enough infrastructure and roading spend is all coming home to roost. health , housing, environment , water.as well.This govt is having to take on the lot due to past do nothing govts

[Beagle]

My review of fuel excise levies shows National's rate of increase broadly matched the inflation rate in the previous nine years, (no real increase in inflation adjusted terms), whereas Labour have dramatically upped the ante since they got into power under the auspices that fuel excise increases are not tax increases. Time for a Tui eh JT :p

[sb9]

Another media write up about the two-day public hearing held by Com Com in Wellington.

http://www.sharechat.co.nz/article/e682f06a/loyalty-scheme-members-not-exclusive-customers-fuel-inquiry-hears.html (http://www.sharechat.co.nz/article/e682f06a/loyalty-scheme-members-not-exclusive-customers-fuel-inquiry-hears.html)

[Beagle]

Z saying their return on invested capital will only be about 7% this year. Heck that's bad and not supportive of tens of millions required for shoring-up additional much needed infrastructure around crucial Jet fuel supplies is it ! Govt set to regulate on that as well ? Life seems to be getting tougher for Z.
Tide finally starting to go out ?

[Joshuatree]

My review of fuel excise levies shows National's rate of increase broadly matched the inflation rate in the previous nine years, (no real increase in inflation adjusted terms), whereas Labour have dramatically upped the ante since they got into power under the auspices that fuel excise increases are not tax increases. Time for a Tui eh JT :p

"Too many years of not enough infrastructure and roading spend is all coming home to roost. health , housing, environment , water.as well.This govt is having to take on the lot due to past do nothing govts" Dogroll;)

[Beagle]

"Too many years of not enough infrastructure and roading spend is all coming home to roost. health , housing, environment , water.as well.This govt is having to take on the lot due to past do nothing govts" Dogroll;)

Hard to believe you forgot to mention National's lack of action on climate change :p

[horus1]

The real point is not National or Labour BUT that we are a small country and Markets do not work. Look at electricity , supermarkets , fuel etc. The ideas need to change.

[Beagle]

http://www.sharechat.co.nz/article/d4028d50/fuel-investment-not-risk-free-in-flat-market-bp.html?utm_medium=email&utm_campaign=Fuel%20investment%20not%20risk-free%20in%20flat%20market%20-%20BP&utm_content=Fuel%20investment%20not%20risk-free%20in%20flat%20market%20-%20BP+CID_9738cb79619fa2c2a12e49d670f1db85&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled4028d50fuel-investment-not-risk-free-in-flat-market-bphtml

[Beagle]

Gull expansion plans in the South Island. https://www.stuff.co.nz/business/116253459/gull-opens-first-south-island-site-south-of-oamaru

[bull....]

have Z dropped there petrol prices? i see oil is below the saudi attack level

[stoploss]

have Z dropped there petrol prices? i see oil is below the saudi attack level

currency is lower so we probably won't quite make it all back

[ananda77]

I think low crude prices would be beneficial to Zenergy, as low pump prices will keep consumers happy and keep concerns regarding Zenergy's margins in check
So, lower crude prices = higher possible margins?

[Beagle]

Yes other issues aside, I think U.S$50 - $60 is the sweet spot for Z.

[bullfrog]

Daughter went for an internship with Z. Quizzed them hard on why she should work for a company that contributes to global warming. Was surprised and impressed with response, that if she wants to help the env, join Z as they are investing serious money in transitioning the company away from fossil fuels.

[iceman]

Daughter went for an internship with Z. Quizzed them hard on why she should work for a company that contributes to global warming. Was surprised and impressed with response, that if she wants to help the env, join Z as they are investing serious money in transitioning the company away from fossil fuels.

They are obviously prepared to answer questions like that so good on them. It may be hard for your daughter to find a job if she limits herself to companies that do not have some CO2 emissions in their business !

[Onion]

Daughter went for an internship with Z. Quizzed them hard on why she should work for a company that contributes to global warming. Was surprised and impressed with response, that if she wants to help the env, join Z as they are investing serious money in transitioning the company away from fossil fuels.

I have a daughter with the same sentiments. But they (the clever young ones with an environmental conscience) ought not limit their scope to organisations doing the right thing.

Your daughter can have a bigger influence with an employer that is currently BAD environmentally! Her opportunities to make a difference is limited with organisations that are already pristine.

[Beagle]

Half year profit announcement due on 31 October.
My friend pointed out to me that Z now offer the ability to stack discounts (buy $40 of fuel which is less than 20 liters) and accumulate the 10 cents off each time for later purchase of 50 liters.
My mate reckons you can really accumulate a great reward over 2 months and this new thing, (they didn't offer stacking before the change in loyalty program that Caltex had) will really hurt their margins going forward. His whole family are in on the thing and Pete reckons he'll get 50 liters of fuel for free every two months !

I suspect ZEL are unaware exactly how much this is going to cost them in terms of their margin as more and more people make the switch at ZEL to stacking on 10 cent off days. With the Government on their case with margins, (final fuel study report out early December), as well as the minnows nibbling away at market share, Gull trying to muscle in on their jet fuel supply contract and the slow but unstoppable shift to EV's, there's quite a few obvious headwinds and its a hard stock to like despite the prospective yield. Value trap ?

It'll be interesting to see how profitability is holding up and the forward guidance change, (if any).

[macduffy]

BP have offered stacking of discounts for several years. I wonder what their experience has been and whether they have been able to gauge the effect on profitability?

[Beagle]

They'll have several years of data so will be well aware of the effect. Bearing in mind this new program has only recently started for Z stores and people only redeem stacked discounts every second month I would think ZEL are very much in the discovery phase. How much they knew about this when they last released downgraded guidance, is the key question.

[Antipodean]

I think the cost of stacking discounts is being somewhat overstated. I assume the stacking is an additional 6c (or whatever super day rate is) each time? If the stacking is exponential not addition, then it is different. However, I could not anything saying otherwise on the t&cs.

So using an addition based stacking, If you use a fuel price of $2.30, and each time ‘fill’ of 17.5 litres at a cost of $40.25, combined with a stacking discount of 6c per fill…
You would need to ‘fill’ 38-39 times to get $2.30 discount for your ‘free’ 50lt.
You’d just have to spend almost $1,600 in less than two months to achieve this.

[macduffy]

Put another way, would Z be justified in thinking that stacking hasn't adversely affected BP's profits over the years?

[Beagle]

I think the cost of stacking discounts is being somewhat overstated. I assume the stacking is an additional 6c (or whatever super day rate is) each time? If the stacking is exponential not addition, then it is different. However, I could not anything saying otherwise on the t&cs.

So using an addition based stacking, If you use a fuel price of $2.30, and each time ‘fill’ of 17.5 litres at a cost of $40.25, combined with a stacking discount of 6c per fill…
You would need to ‘fill’ 38-39 times to get $2.30 discount for your ‘free’ 50lt.
You’d just have to spend almost $1,600 in less than two months to achieve this.

4 vehicles in the family. All wait for 10 cent off days to stack. 2 Kids fill up on average once a week over 8 weeks = 16 lots of 10 cents stacked = $1.60 stacked discounts.
Mum and Dad fill up twice a week, (double fill on 10 cent stacked days) = 2 x 2 x 8 weeks = 32 stacked 10 cent discounts.
Total family discounts for two months = 48 stacked 10 cent discounts = $4.80 off a 50 litre fill. If the system is worked to their maximum advantage its possible to get 100 litres of free fuel per 2 monthly period. More over summer when they're running their jetski and boat and travelling more over holidays.

The point I am making here is a simple one. Caltex have offered stacking before Z stations have not. ZEL will have a good idea of the effect from stacking from previous customer behaviour at Caltex but have never offered it at Z stations before so there will be some compression in margins. Whether these have already been factored into the previous lowered guidance issued some time back or not is the $64,000 question ? I think the risk is they haven't and the additional risk is that (because it can't be quantified at this stage), the effect if any of any possible program(s) the Govt may initiate as part of their fuel review have also not been factored into the previous forecast.

The risk appears to be to the downside and based on hard experience over many years, downgrades usually come in 3's.

For those that think ZEL are already on top of all the issues the present forecast yield at mid point of forecast of 49 cents in annual fully imputed dividends is sustainable = 49 / 0.72 = 68.05 cps gross / $5.52 = 12.3% gross yield, fill ya boots !

[Antipodean]

Using the 10c days will get you there quicker, agreed. A heavy use family as per example can certainly take advantage in the limited time frame. How many families can and will do this?

Even at max advantage you are buying 48 * 20l = 960l of undiscounted fuel to get those 2 X 50l freebees. So 1060l for the price of 960l - your discount is about 10% in reality.
Depending on how people choose, going to Z to take advantage could see an increase in market share which could well offset any change in margin.

On the regulatory side I believe the uncertainty is already priced in. If, as I suspect, there are no major changes post final report, this may show an effect in the opposite direction.
I do suspect in the short term the div yield may be affected but not in the medium-long term.


As a side note any discount above the current fuel cost will be cleared when the stacked discount is used.
So you may want to advise the example group to use the discount as soon as it hits the current price for maximum effect.... not wait until $4.80 is stacked.

Is there a limit to the discounts I can stack?
No, there's no limit! But if you do happen to accumulate more fuel discounts than the pump price per litre, you will lose the over-accumulated amount as your balance is cleared to zero every time you redeem. For example, if you accumulate a $2.10 per litre fuel discount but only pay $2.00 per litre at the service station, the extra 10 cents per litre discount will also be cleared from your card. Don't forget your discounts expire the month after you stack your discount.

[RTM]

Using the 10c days will get you there quicker, agreed. A heavy use family as per example can certainly take advantage in the limited time frame. How many families can and will do this?

Even at max advantage you are buying 48 * 20l = 960l of undiscounted fuel to get those 2 X 50l freebees. So 1060l for the price of 960l - your discount is about 10% in reality.
Depending on how people choose, going to Z to take advantage could see an increase in market share which could well offset any change in margin.

On the regulatory side I believe the uncertainty is already priced in. If, as I suspect, there are no major changes post final report, this may show an effect in the opposite direction.
I do suspect in the short term the div yield may be affected but not in the medium-long term.


As a side note any discount above the current fuel cost will be cleared when the stacked discount is used.
So you may want to advise the example group to use the discount as soon as it hits the current price for maximum effect.... not wait until $4.80 is stacked.

Is there a limit to the discounts I can stack?
No, there's no limit! But if you do happen to accumulate more fuel discounts than the pump price per litre, you will lose the over-accumulated amount as your balance is cleared to zero every time you redeem. For example, if you accumulate a $2.10 per litre fuel discount but only pay $2.00 per litre at the service station, the extra 10 cents per litre discount will also be cleared from your card. Don't forget your discounts expire the month after you stack your discount.

I hate these schemes. And I hate bundling as well. As Trustpower (data/power/gas) and Spark (telecon / Netflix) try to do.
Just give me a fair price and let me choose where I want to shop.

[Antipodean]

I hate these schemes. And I hate bundling as well. As Trustpower (data/power/gas) and Spark (telecon / Netflix) try to do.
Just give me a fair price and let me choose where I want to shop.

In general, I agree. I usually don't pay any attention but in this case am invested in ZEL so seek to understand how they work and may/may not influence behaviour.
For me regarding fuel, I have a 10l tank which I fill once per week - so a few $0.06 here and there are not worth fussing over.

[Beagle]

Using the 10c days will get you there quicker, agreed. A heavy use family as per example can certainly take advantage in the limited time frame. How many families can and will do this?

Even at max advantage you are buying 48 * 20l = 960l of undiscounted fuel to get those 2 X 50l freebees. So 1060l for the price of 960l - your discount is about 10% in reality.
Depending on how people choose, going to Z to take advantage could see an increase in market share which could well offset any change in margin.

On the regulatory side I believe the uncertainty is already priced in. If, as I suspect, there are no major changes post final report, this may show an effect in the opposite direction.
I do suspect in the short term the div yield may be affected but not in the medium-long term.


As a side note any discount above the current fuel cost will be cleared when the stacked discount is used.
So you may want to advise the example group to use the discount as soon as it hits the current price for maximum effect.... not wait until $4.80 is stacked.

Is there a limit to the discounts I can stack?
No, there's no limit! But if you do happen to accumulate more fuel discounts than the pump price per litre, you will lose the over-accumulated amount as your balance is cleared to zero every time you redeem. For example, if you accumulate a $2.10 per litre fuel discount but only pay $2.00 per litre at the service station, the extra 10 cents per litre discount will also be cleared from your card. Don't forget your discounts expire the month after you stack your discount.

10% doesn't sound like much does it ? But 22 cpl its probably more than ZEL's entire retail margin.

[Antipodean]

10% doesn't sound like much does it ? But 22 cpl its probably more than ZEL's entire retail margin.
It is a maximum potential, rather than expected average, discount for the scheme. There is also the possibility of store purchases in those 48 visits every two months.

That being said, thinking of it as being up to 22cpl discount means it (total discounting) will be something to closely watch even for a believer like me.

[Beagle]

It is a maximum potential, rather than expected average, discount for the scheme. There is also the possibility of store purchases in those 48 visits every two months.

That being said, thinking of it as being up to 22cpl discount means it (total discounting) will be something to closely watch even for a believer like me.

Store sales up 10% year on year before this stacking business came into play so yes, I would definitely concede more frequent visiting to take maximum advantage of stacking could well have benefits to the company in that way. Watching this one very closely as the yield is tempting. Plenty of margin in fuel at the moment as its still hasn't returned to pre Saudi infrastructure attack level's despite Brent being below the point before the attack and the $Kiwi now being above the level.
Govt have a point. Prices rise like a rocket on the slightest hint of trouble and fall at the pace of a snail. Replacement cost fuel pricing when oil goes up and historical cost pricing when it comes down. Seems extremely "contrived" for the fuel companies benifet…

With the recent poll result shock, Labour will be exceptionally keen to make political capital out of the fuel study report leading into an election year. Their response could be quite interesting.

P.S. Devon selling down http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/342962/310188.pdf

[sb9]

Put another way, would Z be justified in thinking that stacking hasn't adversely affected BP's profits over the years?

You would think a listed company like Z would have an analytics team that would've modelled their discount programmes and their overall impact on profitability and expected growth. Not that hard these days with all smart tools that we've and data to work with.

[Antipodean]

Devon selling from 5.01% to 4.95% of the company, or a net 250,000 shares is fairly minor in the scheme of things.
Agreed that price rises faster than it falls - though I wouldn't be surprised if this was true across many industries. Just easier to identify with fuel data access and more of a hot topic at present.

I think Labour will need to choose their battles very carefully next year. The final report is likely to be less govt friendly - even the AA is advising the tax portions are underestimated.

[Beagle]

You would think a listed company like Z would have an analytics team that would've modelled their discount programmes and their overall impact on profitability and expected growth. Not that hard these days with all smart tools that we've and data to work with.
Maybe they should use this cool company, not sure how Snoopy and I missed this recent listing in the US https://www.datadoghq.com/


Devon selling from 5.01% to 4.95% of the company, or a net 250,000 shares is fairly minor in the scheme of things.
Agreed that price rises faster than it falls - though I wouldn't be surprised if this was true across many industries. Just easier to identify with fuel data access and more of a hot topic at present.

I think Labour will need to choose their battles very carefully next year. The final report is likely to be less govt friendly - even the AA is advising the tax portions are underestimated.
Just that they can keep selling with complete anonymity...

[winner69]

Z know what they doing around these schemes - robust modelling been done - trust me

[Beagle]

Well my friend Peter keeps buying ice-creams there so maybe he's not the only one :)

[Beagle]

Closed at $5.42, another multi week low. One could be forgiven for thinking the market is expecting another downgrade with the interim announcement on 31 October.

[ananda77]

Closed at $5.42, another multi week low. One could be forgiven for thinking the market is expecting another downgrade with the interim announcement on 31 October.

Although my initial buy was way too high, in the meantime, am starting to like the idea of accumulating a long term investment in ZEnergy. Next step, in case their result disappoints again, accumulate a second lot closer to 5 or lower. Committing to the final buy around 455.

[Beagle]

I think its safer to wait until we hear what they have to say on 31 October. I'm interested in the mid $4 range too but am keeping my powder dry in the meantime.

[BlackPeter]

Although my initial buy was way too high, in the meantime, am starting to like the idea of accumulating a long term investment in ZEnergy. Next step, in case their result disappoints again, accumulate a second lot closer to 5 or lower. Committing to the final buy around 455.

Just try not to overcommit. At the end of the day is this just another retailer in a sunset industry without realistic growth expectations. Nothing clever or cutting edge about what they are doing ... and with the increase of the discounters they will need to compete more and more on price for a product which is absolutely identical to the fuel most other suppliers are delivering. Sure - all these confusing discount schemes might slow down the margin melt for another couple of years, but while you can confuse most consumers for some time, you can't confuse all consumers for ever - and neither have ZEL a monopoly on confusing customers with stupid loyalty schemes.

One day their current customers will wake up and realize that the emperor of complicated discount schemes offers no tangible benefits to their customers over the competition.

[ananda77]

I think its safer to wait until we hear what they have to say on 31 October. I'm interested in the mid $4 range too but am keeping my powder dry in the meantime.

If you already hold a good amount in the company, your strategy is completely logical. However, am in the accumulation phase, so my strategy is to use short term uncertainties to build a long term investment.

[ananda77]

Just try not to overcommit. At the end of the day is this just another retailer in a sunset industry without realistic growth expectations. Nothing clever or cutting edge about what they are doing ... and with the increase of the discounters they will need to compete more and more on price for a product which is absolutely identical to the fuel most other suppliers are delivering. Sure - all these confusing discount schemes might slow down the margin melt for another couple of years, but while you can confuse most consumers for some time, you can't confuse all consumers for ever - and neither have ZEL a monopoly on confusing customers with stupid loyalty schemes.

One day their current customers will wake up and realize that the emperor of complicated discount schemes offers no tangible benefits to their customers over the competition.

Yes sure. Lower crude prices will be good to increase margins with pump prices low, concerns about margins will dissipate. Then there is the EV (?revolution?) which I think will be beneficial for a company that has infrastructure already in place and just needs to add charging stations to the mix.

[Beagle]

If you already hold a good amount in the company, your strategy is completely logical. However, am in the accumulation phase, so my strategy is to use short term uncertainties to build a long term investment.

Agree with BP's sentiment expressed above. The danger of another downgrade is crystal clear to me. The chart also looks a bit ominous.
I see no reason to buy right at the minute. It needs to offer compelling value for me to get back on board. Fair value, I have no interest.

[winner69]

The expected cost of ‘discounts’ from loyalty schemes is built into the displayed pump price.

[ananda77]

The expected cost of ‘discounts’ from loyalty schemes is built into the displayed pump price.

That does not make sense too me or is irrelevant or why did the company needed to downgrade based on discounts then. I think, as a customer, discounts to me are rather a put-off then an incentive. The earlier the company wakes up to this fact and starts to compete on price alone, Gull is my preferred station. Besides, I have no time to bother with discount schemes anyway.

[winner69]

That does not make sense too me or is irrelevant or why did the company needed to downgrade based on discounts then. I think, as a customer, discounts to me are rather a put-off then an incentive. The earlier the company wakes up to this fact and starts to compete on price alone, Gull is my preferred station. Besides, I have no time to bother with discount schemes anyway.

‘Competitive pressures’ were the main cause of the earnings downgrade ...keeping pace with whatbthe competition we’re doing to maintain share ....pump prices being the key.

[ananda77]

‘Competitive pressures’ were the main cause of the earnings downgrade ...keeping pace with whatbthe competition we’re doing to maintain share ....pump prices being the key.

yes...with players fooling around with complicated bonus schemes. I have asked before, how much does it cost to think out, develop, maintain these schemes for no good reason at all - at least for me, no good reason?

[Beagle]

Discount scheme's and incentives built into the psyche of most people, for example Air New Zealand has millions of airpoints members.
I understand some people can't be bothered with them but there's plenty of people who can and don't live near a Gull or one of the other minnows with no discount scheme.

[winner69]

yes...with players fooling around with complicated bonus schemes. I have asked before, how much does it cost to think out, develop, maintain these schemes for no good reason at all - at least for me, no good reason?

Me too

Weird thing is that there own research shows that most punters just want a convenient location, good price and get out as quickly as they can (you and me by sounds of it?) to get their fuel.

But they seem hell bent on ‘loyalty’ being the future.

[ananda77]

Me too

Weird thing is that there own research shows that most punters just want a convenient location, good price and get out as quickly as they can (you and me by sounds of it?) to get their fuel.

But they seem hell bent on ‘loyalty’ being the future.

...the 'NO GIMMICKS BONUS SCHEME': convenient location - overall presence - cheapest offer - saving time. That ensures my loyalty every time.

Question: are fuel retailers bound to display their best offer after discounts? This would be transparent reality competition.

[Beagle]

Significant move down of 44 cents (nearly 8%), just in the last 2 weeks on quite large volume. Not a good omen for tomorrow's half year result announcement.

[winner69]

Significant move down of 44 cents (nearly 8%), just in the last 2 weeks on quite large volume. Not a good omen for tomorrow's half year result announcement.

Sell the rumour and buy on the facts — or something like that

No worries.

[Beagle]

Perhaps...except the rumour doesn't finish until the Govt announces their response to the fuel study program sometime in December.

[winner69]

Nothing new in half year announcement

Pretty boring really except this bit — Z obviously don’t think fuel is a ‘consumer staple’ and sheltered from cyclical stuff .....or else they just say this sort of stuff to give the impression they are up to date with latest buzz words etc


“Z’s earnings are correlated to the overall level of economic activity in New Zealand and we see headwinds in the near term around business confidence, growth and the willingness of businesses and consumers to commit to investment or large expenditure. Despite the nature of our business we are not immune to this loss of confidence in economic activity.


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ZEL/343471/310875.pdf

[winner69]

Operating Cash Flow negative $31m v pcp of positive $111m

And losing market share by looks of it

[BlackPeter]

Operating Cash Flow negative $31m v pcp of positive $111m

And losing market share by looks of it

I guess the fuel discounters (Gull, NPD, MGL, ...) need to eat into somebody's market share. Shows how consumers really value complicated loyalty systems which only waste everybody's time and money.

[winner69]

Media in on the act - 80% drop in earnings not good


https://www.stuff.co.nz/business/117045530/competition-bites-z-energy-as-new-sites-and-discounting-sinks-half-year-result

[Beagle]

Operating Cash Flow negative $31m v pcp of positive $111m

And losing market share by looks of it

Very intense competitive environment isn't going to get any less intense going forward, probably even more intense as unmanned minnow stations with low overheads continue to eat into their market share and intensify retail margins even further. Loss of market share is quite significant.

Headwinds from:-
Possible regulatory response to fuel market study
Increasing competition from low cost operators
The gradual uptake of electric vehicles.

Half year results was less than half the EBITDAF forecast for the year. I remain of the view there is downside risk to their very low FY20 forecast.
Full year dividend forecast of 48-50 cps but they are only paying out 16.5 cps as an interim dividend is an interesting call and not one that would inspire me with confidence if I was a shareholder.

I would not be surprised in the slightest to see this test the $5 mark in the next few months especially if Cindy gets on her soapbox and tries to make political capital out of the fuel study due for final release (from memory), in very early December.

[Beagle]

Media in on the act - 80% drop in earnings not good


https://www.stuff.co.nz/business/117045530/competition-bites-z-energy-as-new-sites-and-discounting-sinks-half-year-result

FY20 very low ERBITDAF forecast of $390-430m probably materially lower again in FY21 is how I see it. Dividend level under threat this year and could be materially lowered next year. Stock looks like an obvious value and dividend trap and unless they can stem the tide of rapidly losing market share the future looks quite challenging to me.

[trader_jackson]

market pretty positive it seems with the share price up over 2%, I'm a bit confused why, these results look shocking to say the least

[winner69]

Sell the rumour and buy on the facts — or something like that

No worries.

WhTever that meant te market seems to like what they said

That Flick thing was always a dog so essentially writing off the investment no surprise. That’s what happens when you play with others money

[Beagle]

market pretty positive it seems with the share price up over 2%, I'm a bit confused why, these results look shocking to say the least

Agreed it was ugly. Early days, but so far I would say that the share price reaction is bizarre. Lets wait and see what happens when the Australian market opens. Doubt they'll think much of this result.

Yeah, flick was always going to be exactly that with shareholders money. Reckless. Just invest in more charging stations at your service stations and stick to your knitting for goodness sake.

[macduffy]

Agreed it was ugly. Early days, but so far I would say that the share price reaction is bizarre. Lets wait and see what happens when the Australian market opens. Doubt they'll think much of this result.

Yeah, flick was always going to be exactly that with shareholders money. Reckless. Just invest in more charging stations at your service stations and stick to your knitting for goodness sake.

Yes, it's a dilemma. A company in a sunset* industry needs to diversify its business by investing in, ideally, related directions. Not all these new investments will succeed but "sticking to the knitting", equally, will risk failure sooner or later.

* If we accept that the oil industry is a sunset industry?

[Bobdn]

Yes, it's a sunset industry but the sunset will take a good 30 to 40 years. Sticking to ones knitting for 40 years sounded pretty good to me. You could make beautiful big cardigans to wrap around adoring shareholders in that time frame.

Flick was a poor choice - I made the point as soon as they announced it many many ZEL thread pages a go.

[Beagle]

They certainly can cuddle shareholders with lots of warm cardigans if they don't do anything silly and I agree its going to be a very long sunset. I haven't read into their store sales stat's but I would have thought its pretty obvious as the EV uptake grows ZEL have an opportunity to provide rapid charging stations so EV owners can charge up with power, coffee and snacks at the same time. For example, my local Mobil has a subway within the store and I have seen Caltex stores with subway's within so its not like ZEL are not aware of this already. Maybe an idea for ZEL to expand more of their site's this way ? Give EV travelers on the go somewhere to charge up and replenish their bodies at the same time, build it and they will come...

ICE engines not dead yet by any means and as soon as the Govt get their claws in with road user charges the economics of EV's are going to change quite dramatically.

[ananda77]

[QUOTE=winner69;776585]Media in on the act - 80% drop in earnings not good

the falling NZD must have had quite an impact. Bought gold end of November 2018 at a USD/NZD level ~0.69, now trading just under 0.64. Buying crude getting expensive. Wonder how the government is dealing with this situation? Debt also becomes expensive....and I think, the currency race to the bottom is far from over yet...

[Antipodean]

Still have 40-45% of market share despite all the headwinds of the past 6 months.
$20 debt paid down
Interim dividend confirmed and reaffirmed guidance for end year (looking at Z history they are fairly consistent for guidance)

Flick seems... horrible.

Market study final due 5th December and I'm still of the opinion no major legislative impact will come out of it from this government.

Mixed bag HY more than completely negative... not surprised by anything stand out.

[winner69]

Still have 40-45% of market share despite all the headwinds of the past 6 months.
$20 debt paid down
Interim dividend confirmed and reaffirmed guidance for end year (looking at Z history they are fairly consistent for guidance)

Flick seems... horrible.

Market study final due 5th December and I'm still of the opinion no major legislative impact will come out of it from this government.

Mixed bag HY more than completely negative... not surprised by anything stand out.

Consistentbabout their profit guidances?

Last 15 months - 3 Downgrades / 2 upgrades / 2 reaffirm

Next announcement - takes your pick I reckon

[Beagle]

Interesting insight into the state of the economy. Maybe all those pessimistic ANZ reports were right ?
http://www.sharechat.co.nz/article/58f89d73/z-energy-says-economy-wide-slowdown-hurting-sector.html?utm_medium=email&utm_campaign=Z%20Energy%20says%20economy-wide%20slowdown%20hurting%20sector&utm_content=Z%20Energy%20says%20economy-wide%20slowdown%20hurting%20sector+CID_343eeae197a 21a9f75e842d9e94b2dc8&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle58f89d73z-energy-says-economy-wide-slowdown-hurting-sectorhtml
Extract for the time poor amongst us "Z Energy chief executive Mike Bennetts said the company is seeing a slowdown across the country"
and this... Bennetts said the economy was the weakest he had seen it in the past 10 years. Even jet fuel volumes, which had been growing at double-digit rates, were flat in the past six months..
So the economy is slow and their margins are under very intense pressure that's likely to increase as minnows expand more and we have the Govt about to release their fuel study report next month so there's regulatory risk as well. What a "compelling" investment proposition this one is ! (Sarcasm intended in case its not perfectly obvious to anyone )

[macduffy]

Consistentbabout their profit guidances?

Last 15 months - 3 Downgrades / 2 upgrades / 2 reaffirm

Next announcement - takes your pick I reckon

In a changing, competitive market I suppose profit guidance is subject to change, particularly as the price of their product is set on a volatile world market.